Get Your Business Ready to Sell

There are a variety of reasons why you may have made the decision to sell. The most common is that you are reaching retirement age and none of your children are keen to step into your shoes, another is that you fancy a change of direction and having successfully established your own business, you are keen to have new challenges and goals. When it comes to selling your own company it will not be without some emotion as you reflect on all the hard graft it has taken to establish it over the years. 

Selling your private company does need good preparation time and if you address all the suggested areas you will reap the benefits which will include securing the best price for it and a smooth transfer of ownership to your buyer. For some of the suggestions we give, you will need professional advice – tax, accounts and legal issues - but seeking these will be seen in a positive light because potential owners are keen to buy a company that has been well run and will prove a worthwhile acquisition.

Could Your Company Be More Profitable?

The first question to ask yourself is have you maximised on your company's profitability? If you work hard to do so now, this will enhance the value of the company because you will be able to demonstrate how the level of earnings are rising and will continue to rise – very attractive to potential buyers.

How Is Your Balance Sheet?

Is your company's balance sheet in good order or could it do with a spring clean? Have a good look at the non-business assets, are there any you can remove? What about the company's spending - particularly expenses? These may well need careful consideration as there may well be areas where you can improve the company's efficiency. Don't be scared to try different things as potential buyers will want to see that you have a 'tight rein' on things and that you are not scared to troubleshoot if you see a problem developing.

Are You Controlling Your Finances Well?

Look at your profitability as objectively as you can. Do you have a strong staff member (s) looking after the finances? Does your company have a healthy cash flow? If the answer is no, what can be done to change the situation? Do you have a good management team and could your capital expenditure do with a prune? 

Are your books in good order? Buyers will want to see he paperwork covering the last three years in formal financial statements. Ensure that all your legal paperwork is well presented.

How Well Do You Know Your Customers?

Any potential buyer will be very interested in your customer base – for obvious reasons! Have you analysed it recently? Is your customer base broad enough or could it be developed by diversifying a little? Is your company the first port of call for the goods/service you offer? Do you advertise well and is your company's name on all the approved lists?  As you are preparing to sell, will you be able to hand over a full order book and contracts book – these will make a huge difference between selling and not.

What Future Do You See for the Company?

True, you will not be at its helm, but potential buyers like to hear a reliable forecast for the next five – ten years, a forecast that is reasonable and attainable and gives extra value to your company. Show that you embrace innovation and conservation and that your vision is on the cutting edge of your type of business as buyers will want to be confident that the business will continue to grow even in this fast-paced world we live in.

A Parting of the Family

In preparation to sell the business it is a good idea to separate from any family interests and to deal with any issues before it goes on the market. It is also a good time to ensure that your shareholder expenses are in order.

Give the Building a Spring Clean!

Just as if you were selling your home, ensure that your company's building is looking cared for and in good order. Does the entrance to the building look clean and professional or would a coat of paint and a smart new sign make an improvement? Inside are offices and sales floors clean and tidy? Potential buyers are keen to check that your company is in good order in all areas so that they can get 'their feet under the table' before they need to tackle any areas that they would like to streamline or change. Just like a house, a wall of imminent work is off putting. A chaotic sales floor, management team and back room operation are also negative signs and will lead to low price offers. 

By the time you have reviewed these points, your company should be in good shape and ready to go on the market. It is well worth contacting a trusted local expert who specialises in selling commercial properties and getting them to visit to assess your company's value and to discuss the best way to market it successfully in your area. It is important to realise that it can take a year plus to sell a business and during that time it is essential that you keep 'your eye on the ball' and not let standards or turnover slip.. 

Prepare yourself for the inevitable question. 'If your company is as good as you say it is....why are you selling it?' You may well also begin to wonder why!

With thanks to Chris Stevens for this insightful article on selling a business as a ‘going concern’. Here at Sawyers we have applicants seeking almost every type of business and we’re here to help whenever you need us.

Posted on