Is your business prepared for sale?
08 November 2018
If you are thinking about selling your business, you are most likely aspiring to achieve the best possible price and the most favourable terms. Any time and effort invested into presenting your business in an attractive way is certainly worthwhile. Potential buyers will appreciate seeing that the business is in good order and you will benefit from lowered risk of delays and a reduced scope of negotiation during the acquisition process.
“Done right, preparation is likely to result in a smoother sale experience for both you and your buyer and hopefully assist you to achieve the best possible price.”
Identifying and addressing any issues and inefficiencies
At an early stage you should conduct a fundamental review of the internal and external affairs of your business to determine whether there are any matters that could affect its attractiveness to potential purchasers. In essence, this exercise requires you to try to look at your business from an outsider’s perspective.
Understandably, it can be hard to be impartial about something that you have invested so much time in, and it might be worth employing the services of an external consultant to help you in this regard.
Protecting your assets
A key area of interest to any potential purchaser will be the assets of the business, whether physical premises and equipment or intellectual property, trade secrets and your key personnel. You may need to take steps to protect assets and tie in key people.
It may be that you only wish to sell some of the assets of the business, in which case we will be able to assist you with restructuring (if appropriate). Whatever the value that you hope to realise, there will also be tax considerations which can often be mitigated if you plan well in advance and we can work closely with your tax advisors to help achieve this.
Getting your house in order
Your ability to demonstrate that your books are in order is essential. Ensure that there are no discrepancies in accounts and that your business is financially healthy. A disorganised set of accounts can give the impression of financial problems, whether or not any exist.
Alongside past performance, a purchaser will want confirmation that the future business pipeline is healthy. They will want to review your commercial agreements to understand the way your business brings in revenue. We can help make sure that contractual documentation is up to date, relevant, and fit for purpose.
Throughout the life of your business, you will have entered numerous other agreements which determine the costs of the business. For example, with contractors, suppliers and your staff members. You might have internal policies, a lease or licence of premises, agreements with web hosting and data storage providers, insurers, accountants etc. All such agreements need to be readily available and up to date.
Your internal processes and procedures may also need to be revisited to determine whether cost savings can be made and whether they remain up to date with the law and industry standards.
Resolving any disputes
If you are embroiled in any disputes with customers, suppliers or staff, then these will need to be dealt with and resolved as soon as possible.
Ultimately, preparing your business for sale is a multi-step process that needs to be approached with utmost care and consideration. Done right, preparation is likely to result in a smoother sale experience for both you and your buyer and hopefully assist you to achieve the best possible price.
This article is for general information only and does not constitute legal or professional advice. Please note that the position may have changed since this article was published.