There are many factors to consider before deciding on the sale of your business, but if you believe it is the right time to move on, there are numerous steps involved in the sales process. You will want to make sure that the reasons for the sale are the right ones, and not purely because of a lack of profitability as this could put off a potential buyer. Other important steps such as valuing your business and deciding whether to use a broker can help you to maximise returns from the sale. Allow us to explain how you as a business owner should go about selling your company, so that you follow all the correct procedures.
When should you sell your business?
Because the process of selling your business can be slow and time consuming, you should ideally start planning this process at least a year in advance. This will allow you time to get your financial records in order, and possibly improve your customer base, making your business a more appealing proposition by the time you are ready to move on. Preparing multiple different exit strategies can ensure you are well prepared for any situation.
Reasons for selling your business
Once you have made the decision to sell your business, prospective buyers will likely ask you why. You may have made this decision for a number of reasons, for example you are changing careers, retiring, in a dispute with your business partner, or you are simply bored of the field you are in. When finding a buyer, you will want to reassure them that your business is profitable, and you are not selling it due to cash flow issues or it not being profitable.
Valuing your business
One of the most important questions to answer when selling your company is what is your business worth? You won’t want to risk pricing your business too high or too low, so it would be worthwhile to have a qualified appraiser, who will take into account all business assets and intellectual property to give you the most accurate business valuation. This is the best way to ensure you are getting maximum value and reassure any potential buyer that they are paying a fair price.
Preparing business documents
You should be prepared to show evidence of your business history to any interested party, so preparing important documents such as financial statements or company tax returns can show them that everything has been done by the book. An accountant can help you to organise these important documents and can advise you on possible deal structures. They can also assist in preparing copies of an information pack that you can distribute to anyone who requires further information.
Finding a suitable buyer
Finding the right buyer is undoubtedly the most challenging part of selling your business, as it can be difficult to attract serious enquiries. This is why you need to advertise in the right places and try to have two or three interested parties so that you have multiple options to choose from. Getting them to sign a non-disclosure agreement is important so that details of any agreement are kept private. You may want to use a business broker to help you find the right buyer, as they will take care of all the details and due diligence whilst you can continue to concentrate on day-to-day operations. You should remember that you will have to pay a broker’s commission, so check that they are experienced and have a proven track record of success. Exploring selling your business to someone you already know such as an existing employee or a relative may save you this hassle.
Whether you are selling a small business, or are the owner of an established company, you may not be familiar with the process of selling your business. If you require further guidance on the right steps to take or assistance organising important financial documents to provide to potential buyers, allow our expert accountants at Omer & Company to help. Our secretarial services can not only help with any changes of particular, but organising returns and other paperwork to provide to any interested party. To learn more about how we can help, call us now on 020 8850 0700 or email info@omeraccountants.co.uk.
