Preparing your business for a sale
Selling your business is a big move for any owner. You’ve built this company up, scaled it and put years of hard work into making the business a success story. So, when the time comes to sell, you’ll want to know that you’re getting the best price, and the best future for your legacy.
We’ve outlined five ways to maximise the value of your business, with practical steps for making your company the most attractive prospect on the market.
5 steps to prepare you for a sale
The first thing to underline is that selling a business is rarely a fast process. Most owners will begin planning their sale years in advance, working to an exit strategy that sets out all the key milestones. Your aim is to leave the business in great shape, with stable finances, a solid team and a customer base that will continue to provide solid revenues for years to come.
So, how do you achieve these goals?
1. Assess your reasons for selling and your desired timeline
What’s the key motivation for selling your business? Are you retiring, looking to move on to other opportunities or hoping to unlock your equity? Once you know your reasons, you can decide on some core goals for the sale, and set a realistic timeline for the sale.
2. Get your financial house in order
'Doing your financial housekeeping’ will mean preparing financial statements, submitting outstanding tax returns and making sure you have access to any other documentation that potential buyers will want to see. You may also want to work with an M&A expert to discover the company’s true market value.
3. Make your business attractive to buyers
Any buyer wants to know they’re taking on an attractive business proposition. Making the business feel more attractive means improving your marketing and sales strategies, beefing up your operations and ensuring you have a positive cashflow position. You should also think about creating a transition plan for the buyer, so the handover is as smooth as possible .
4. Find the right buyer
It’s important to feel like you’re handing your legacy over to the right owner – and getting the price you need. This may involve working with a business broker or marketing your business yourself. Make sure you vet potential buyers carefully to ensure that they are a good fit for your business and your existing team.
5. Negotiate the sale terms
Achieving your desired price could involve a fair amount of negotiation. You’ll need to sit down with your buyer to discuss purchase price, payment terms and other conditions of the sale. Be prepared to compromise and be willing to walk away from a deal if the terms are not right for you.
If you’re intending to sell your business in the next five years, it’s important to start planning now.
Coming up with a sale plan and a robust exit strategy takes time. As does sorting out the business housekeeping and finding the best possible buyer for the company.
As experienced bookkeepers, we’ll help you:
- Get organised, locate the relevant documents and improve your record-keeping
- Clean up your business to identify any financial issues
- Expand your business network, to help find the best buyer for the company
Following these steps will greatly increase the market value and price of your business.