Today we are touching on a question that I often get from business owners, which is How do I prepare my business for sale?
There are lots of factors that go into the preparation, so click the video below to hear my 6 top areas business owners should think about when preparing to sell.
how to prepare your business for sale
Selling a business can be a particularly emotional and tough time, as there’s [understandably] often a great attachment to the business that you’ve spent years building.
But, regardless of the emotional toll it can take, it’s important to take steps to ensure that you control the timing and as much of the sale process as possible. To help you prepare your business for sale, below are 6 key areas every business owner should think about.
know your pre-sale numbers
You should know the relevant market price for your business and I’d encourage you to get some professional advice around that number.
It’s also important to think about what your business is worth to you and what value it brings to your life. Knowing the market value and what your business is worth to you is important as you plan for the future.
know your post-sale numbers
Following on from the first point, it’s also important that you understand what your post-sale numbers are. That’s about the sale price for your business, the tax you’ll pay and then any wealth planning consideration.
You need to know what you will be left with and the only way to do that is by knowing your numbers and getting professional advice – this is not the time to take advice when standing around the BBQ.
take a buyer’s view of your business
It’s also important to step back and take a ‘buyer’s view’ of your business. Think of it like pre-sale due diligence and taking a critical eye across the business from the front door to the back door. Look at your systems, your processes, your human resources and your operations. What are you [and your team] actually doing day in and day out?
What are those key activities that underpin how the business operates – how would a buyer view them and what are they looking for? Looking at your business from a buyer’s perspective means that you can find areas for improvement [and fix them!] before you go to market.
have up-to-date financial information
You’ll need your financial information up to date before you go to market. Buyers want up-to-date information and they’re going to want up-to-date information as they move through the transaction.
So, it’s important to get all of that organised before you go to market. Nothing kills a deal quicker than time – particularly when a buyer is waiting for information that you should have on hand.
review your involvement
Finally, it’s important to review your involvement. If a buyer thinks the business is too dependent on you, then they aren’t going to pay what you think the business is worth.
So, it’s important to be clear and hard in terms of your assessment of your involvement in the business and what steps you might be able to take to remove yourself as much as possible.
have the right team in place
And to finish, have you got the right team in place? I’m talking about accountants and solicitors who’ve got transaction experience and understand what it takes to get a business sale through to completion. These advisors will be invaluable as you progress on your sale journey
we’re here to get you sold
So, there we have it, 6 key considerations for owners to think about when preparing their business for sale! Remember to know your pre- and post-sale numbers, take a buyer’s view of your business, make sure your financial information is up to date and review your involvement.
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