Ten Quick Tips on Selling a Business
Careful preparation and planning of a business for sale can mean the difference between smooth transaction, or a bumpy ride. Business Values and Appraisals have compiled 10 quick tips to help you prepare your business for a sale.
- Secure all preferred supplier agreements, licenses and contracts and ensure that they are transferable to a third party.
- Prepare an information memorandum with the inclusion of a SWOT analysis
- ( Strengths, weaknesses, opportunities and Threats)
- Have your financials in order and up to date.
- Allow for a period of time that you will stay with a new owner to ensure a smooth transition. In many cases, subject to size of the transaction can vary from 1 month to 3 years.
- Ensure an even spread of clients. This minimises the risk to a prospective acquirer of losing “large” clients and enhances the value of the business.
- Appoint a solicitor that specialises in the sale of businesses and have a contract for sale prepared, before going to market.
- Identify key employees. Ascertain their long term plans and career goals in your company. What is your plan B if they are leaving just before, during or immediately after the sale of the business?
- Take your financials to your bank manager to investigate their lending criteria, how much they would lend against the cash flow & assets of your business and why. This will give you an indication of how a buyers lender will perceive your business.
- Have the business professionally appraised to ensure that you are not aiming too high on price, or too low, or what you need to do, to have the business “sale ready” before placing the business for sale.
- You have put a lot of hard work into your business and you may have an emotionally attached. It is important to understand that if you have decided to sell, let go of your attachment before you place the business for sale. This will give you more clarity in the decision making process.