Why now could be a great time to sell your business
Now could be a terrific time to sell your business. No, I really mean it. But won't I be giving it away, I hear you say? It is a buyer's market after all. Well, not necessarily. Think about it from the point of view of the investor. Traditionally, they would be putting money into stocks and shares or property – but neither seems a particularly inspired option at the moment. So how about investment in a solid, profitable business with good growth potential? It sounds a little more attractive now, doesn't it?
Now, a business is only worth what someone is prepared to pay for it, so what steps can you take to get the highest possible price for your business?
Most importantly, work with specialist advisors to ensure the business is as attractive as possible to a potential buyer. I cannot emphasise this enough. It is likely that your business is the largest investment you have every made, both in time and money. A business sale is a complex process - with the right advice in the right areas, you make sure you reap your just rewards from it.
Plan ahead for the sale, several years if possible. This enables you to get the business in the best possible shape to maximise the sale price.
Make sure your business is healthy, with good profit and cash flow. Have a clearly defined strategy, with a good financial track record – increasing profits, good control of working capital – and good, credible forecasts. Make sure your systems are robust and efficient and a strong management team is in place, so the business operates without you needing to be there. This point is important if you are to maximise the value of your business and avoid complicated earn out arrangements.
Focus on increasing profitability. Typically, a buyer would be looking for a 3- to 5-year payback. Therefore, the higher the net profit, the higher the likely price for the business.
Ensure the business is structured to minimise your tax liability on sale. The last thing you want is to see your hard-earned rewards heading into the tax man’s pocket! A good wealth management advisor will be able to guide you through this.
Make sure your house is in order to ensure a smooth sale. Involve a good commercial lawyer early in the process to ensure you comply with employment, health and safety and other legislation. Work with your accountant to ensure your financial records stand up to scrutiny during the due diligence process.
Engage a reputable business broker to ensure the sale goes through as smoothly and quickly as possible. Not only will they find a buyer for your business, but they will also facilitate the entire transaction, keeping all parties aligned and on track to complete the sale.
Finally, sit back, relax and enjoy the fruits of your labour! You have worked hard to build your business; you deserve to reap the rewards!
I work with business owners to prepare their businesses for a successful sale – and the sooner they start, the more successful the sale will be. Do you plan to reap the rewards of your hard work? Then the time to start is now – click here to discover how I can help you get the best price for your business.
