10 Tips to prepare your business for sale.

Business Network South Manchester member Paul Dodgshon of Uscita has recently written the article below in how to prepare your business for sale. However, the article is ideal for any business owner to put their business in a solid position.

1. Early preparation

Preparing to sell your business may take several weeks or months, so it is important to plan for this as early as possible and get all of your business affairs organised and up to date. As well as saving money in the long run, it will help ensure that the best price is paid for your company.

2. Keep exit plans confidential

It is advisable to keep the sale of your business a secret as you do not want to ring any alarm bells. Letting employees know your business is for sale could create uncertainty and job insecurities, which is not a good motivator and could be costly for your business at such a key time. Similarly, suppliers may become worried and request payment up front for their services, particularly if there is doubt as to where this may come from in the future.

3. Decide What You Want from the Sale

Knowing your priorities for the sale will help you to achieve your goals, whether this means protecting your employees, completing the sale in a set time period or reaching a specific sales price. You may need to discuss the sale with your business partner, specific employees or family to ensure you are all on the same page and get external advice from a broker regarding the best timescales and sales strategies to help you meet the goals you set.

4. Do your due diligence early

As a seller, you should carry out your own due diligence on your company at the earliest convenience to avoid any unexpected surprises for both the buyer and you. Ensure that you have access to all key contracts with employees, customers and suppliers, and all other relevant agreements and information. Having this information readily available will make the diligence process less painful and allow any issues to be identified and addressed at an early stage.

5. Identify and manage any deal-breakers

Putting your business up for sale means that it will be carefully examined by prospective buyers. If there are any outstanding issues such as legal disputes, incomplete company records, late payments or significant debts, then it is best to resolve these before anyone takes a look. Your broker can help you to identify potential deal-breakers and put you in contact with legal experts or financial advisers if necessary.

6. Put your finances in order

Potential buyers will also want to take a close look at your books and financial forecasts, so it is essential to ensure these are all clear and complete. You should be ready to answer common questions such as the expected return on investment for buyers, your profit margins and who your key suppliers and customers are. You might need to talk to your accountant or seek financial advice to ensure everything is in order.

7. Determine your business value

You need to know how much your business is worth in order to make the right decisions about selling. The valuation will consider everything from your financial records to the reliability of your supply chains and the potential for growth. This will give you a good idea of what your business is worth if you sell it now.

8. Enhance the Value of Your Business

The valuation will help you to identify areas that can be improved to increase the value of your business. It can often be worthwhile investing in new equipment, providing more staff training to make the business less dependent on you, strengthening your supply chains, or taking other steps to increase the expected sales price. How much you can do will depend on what resources are available to you and how much time you have to prepare for the sale.

9. Decide How to Market Your Business

Once your business is ready to impress, you are ready to reach out to the right potential buyers. An effective sales strategy will involve preparing detailed sales information, targeting the right types of buyers and convincing them of the value of your business. You may need to keep some information confidential or find a way to appeal to buyers in a very specific niche. The right approach will ensure that your business will be entrusted to the right person.

10. Prepare the Business for Handover

Finding the right buyer will not be the end of the sales process. You will then need to prepare to hand over the business and pass on all your knowledge to ensure it can run without you. If you are using a broker to help with the sale, they can help you prepare for the transition to ensure the business keeps running smoothly.

There are a lot of decisions to make and steps to follow when considering selling your business, and it takes significant preparation, homework and patience. No matter what is driving you to sell, whether it is personal circumstances or market forces, you should try to sell your business when you are on top. A profitable and successful business with a good reputation is much more appealing to a buyer.