Preparing your business for sale
When should I start preparing my business for sale?
It is never too early to start preparing your business for sale. The exit event may be some time away, but the processes you put in place will not only enable you to get the best value for your business, it will be beneficial to the ongoing development of the business.
Things can happen quickly. There may be a change in your circumstances. You may be approached by a large trade buyer. Tax legislation may change and significantly change the value you can realise. If you are doing the right things in a timely fashion, you and your business will be in a better position to react to these types of circumstances.
What plans should I put in place?
Every business is different but there are several things that all businesses should be proactively doing. Four of these areas are:
Consider your own role.
How reliant is the business on its owner? Many owner managed businesses can suffer in this area, as the perception is that “the value walks out of the door with the vendor”. Putting a credible senior management team in place, with the ability and motivation to drive the business forward when you step back, will not only make the business more attractive to an acquirer, but also provide a potential alternative exit option.
Understand your USP.
What is it that makes your business different? Can you express this to a buyer? By having a clear strategic business plan, this will not only highlight what makes your business special, it will provide a platform for you to express this to a buyer. Those businesses that can demonstrate a clear USP are more likely to attract higher values on exit.
Ensuring basic compliance with legal and reporting requirements will send the right message to a potential buyer. Doing basic things, like ensuring that employee and commercial contracts are in place and up to date, will help give a buyer confidence that your business is properly run.
How exposed is your business to a single supplier or customer? This can be both the strength and weakness of many businesses. It can be mitigated by a focussed strategy of seeking alternate options, but if this is not possible, consideration should be given to formalising supply or customer agreements / contracts.
What should I do?
No matter how far in the future you think a sale may be, start thinking and planning for his today. Professional advisers buy and sell businesses everyday so they can really help you with your planning and preparation to ensure that you maximise the value of your business when you do decide to exit.
At Garbutt + Elliott there is an experienced team of corporate finance professionals that offer a bespoke service to our clients. Our corporate finance team has over 80 years combined experience, now with a headcount of 12 spread over two offices. In the last year, the team has worked on over £160m worth deals across 65 transactions.
If you want to find out more about your exit options and preparing your business for sale please contact Rob Burton, Corporate Finance Partner, at Garbutt + Elliott on firstname.lastname@example.org or call 07939 583737.