Selling your business is not only demanding in terms of time but also emotionally. Preparing in advance for any sale can save a considerable amount of time, effort and emotional energy – which might be better spent in actual running of your business in the run up to a sale.
Here are our top tips to get your business sale ready.
Start to prepare now
Even if you think a sale of your business is way off in the future, it’s usually beneficial to start preparations early so that you can deal with any issues that arise and also to be ready if an unexpected offer lands or you experience a sudden change in circumstances. If your business is prepared in advance of the sale process you will reduce any time pressures during the sale process and hopefully achieve a good balance between time spent managing the sale and continuing to run your businesses.
Get paper ready
Potential buyers will want to know everything about your business and you will have to provide information on topics like finances, employees, property, intellectual property, IT, disputes and tax. You will need to provide the buyer with warranties, which are essentially promises that such information is true. Being able to provide accurate, organised and up to date information will demonstrate how well your business has been run and reduce the stress of trying to locate information during the deal process.
Speak to your advisors at an early stage
Discuss the actions you can take to optimise both your sale price and your tax position with your professional advisors early. Certain steps you might want to take need to be dealt with well in advance of completion of any sale so early consultation is vital. Ensure your advisors are involved in drafting the heads of terms for the sale as they will often provide suggestions and alternatives you might not have thought about.
Consider different deal structures
The structure of a sale will vary from business to business, individual needs and the personal and financial circumstances of both buyer and seller. For example, if your business is high growth, an earn-out may be the most appropriate (where all or some of the price is determined on the future performance of the business). For an asset rich business, you might be better off taking all the price up front – but can the buyer afford to do that? If they can’t how do you ensure you are guaranteed receiving any part of the price you don’t receive on completion? All these things can be planned for but the sale process will be much smoother if it is properly planned in advance and all parties know the direction the deal is heading.
If you don’t think a sale is going to be achievable or won’t achieve the best result for you, speak to your professional advisors about other options to consider such as merging with another business, issuing shares to your management team or selling part only of your stake in the business. Your advisors will be able to explain further alternatives and the advantages and disadvantages of each.
If you would like more information on selling your business or buying one, or require advice about preparing your business for sale, please contact our corporate team today.