How to get the most from selling your business

We are now in the era of the young entrepreneur, i.e., individuals who start a business purely with the intention of selling it in the future. Entrepreneurs will always seek to develop their business strategy around how to make their business appealing to potential buyers and to maximise their sale value.

But what if you find yourself needing to sell your business when this was not your initial intention? This could be due to illness, shareholder differences, retirement, selling your business to seek a new challenge, or simply that your family business has succession issues? These issues and others will mean too often a less planned for and more rushed business exit strategy.

However, a word of warning if you fall into this category as potential buyers will spot desperate last minute attempts to window-dress your business and if they don’t, then the professional advisors they employ to perform due diligence on your business most certainly will!

The most important thing to remember when selling a business is that investors are often looking for long-term benefits, so always ensure you run your business looking to do the same. You might only be a few years away from retirement, but don’t let your business look tired.

There are four main areas that potential buyers will be interested in:

• the business financial accounts
• business strategy
• staff and systems
• contractual arrangements with customers and suppliers

So what can you do to make these areas more attractive to buyers?

• Instead of focusing the accounts on minimising your tax liability, focus them on highlighting earnings and earning potential. Highlight any one-off costs incurred to give a clearer indication of the future profitability of your business. Use your accounts as a marketing tool!
• Make sure your business strategy is clear and concise. You must be convinced by your business strategy; otherwise you will sell it short. Are there ways that you can improve efficiency or reduce costs without sacrificing quality? To obtain the best price for your business it should be marketed when it shows the greatest potential.
• The most valuable asset that a business can have is its staff. If your most valuable member of staff is you then things have got to change. You have to show potential buyers that your participation is not essential to the success of the business.
• A potential buyer may be looking for synergies with an existing business in which they have an interest. They will be looking for ways in which they can achieve savings through economies of scale or improved terms with suppliers. Therefore, make sure your business is not tied into long-term contracts with suppliers and ensure that your legal housekeeping is up to date.

There may be many other areas of your business which could also be polished in order to make it more desirable to potential buyers. So, if you are looking to sell your business in the future why not obtain advice from an objective and knowledgeable advisor who can assist you to maximise your sale value.

Click here for more information on our Business Development services.

For further information and advice on selling your business contact your local MFW office. We have offices in Ashford, Cranbrook, Dover, Herne Bay, Maidstone and Sittingbourne.