The list below is not extensive, but does provide some indication of the many factors that need to be considered in preparing your business for sale.
Click on the headings below to reveal the associated information.
The first thing to consider is the nature and type of business being sold. Are you a sole trader,
limited company, partnership etc.
The buyer will want to know:
- what he is buying
- from whom
- and for how much.
1 – First Impression
Just like any sale it is important to make a good first impression and maintain that good impression throughout the sale process and beyond
2 – Up to date facts and figures
It is essential to be able to present a coherent current position to the buyer – they need to know exactly what the current situation is they are buying into.
Additionally, this is all part of the good first impression, if you do not know where you are you will appear out of control.
3 – Click
It is difficult to describe just what makes two people click, but everyone knows roughly what this means. e.g.:
- a meeting of minds
- similar viewpoints
- an ability to work through difficulties together
In some ways it is a part of the first impression. The buyer needs to know they will be able to get through the buying process without too much hassle and that you will be around to provide good quality support in the early part of the hand-over process at least.
This is a breakdown of just what is for sale, both tangible and intangible, e.g.:
- physical assets: premises, equipment, vehicles etc.
- intellectual assets: intellectual property, patents, software code etc.
- skills: the team, key personnel etc.
- goodwill: the customer base, the business brand(s), ongoing orders etc.
You will need to decide who else, if anyone, will be involved in the sale. If the skills and abilities of the staff are part of the sales argument, the buyer may have to meet one, or two as a part of the sale process.
A broker such as sell-your-own-business.co.uk is not theoretically essential, but an intermediary can not only provide advice on pricing and the general approach to the sale, they can also handle the negotiation on your behalf and significantly smooth the process of the sale.
The smoothness of the process for many buyers can be the difference between buying and not buying.
Let’s be clear about this from the start, the cost of the sale can be substantial and even though advice will cost more money you will really need it.
The legalities of the sale will require qualified support and this type of lawyer is not as easy to find (or as cheap) as you first might think when picking up the telephone directory.
Equally the accounts information will need to be presented correctly to ensure all costs and profit making opportunities are as clearly outlined as possible.
If you are selling a limited company, this accounts information may have to be different from normal year end accounts; if a sole trader or partnership you may not a manage your accounts in the right way at all – you will almost certainly require advice.
Offers can happen quite quickly and, unexpectedly – you don’t want to have to say “can we delay completion” for any reason whatsoever.
The documentation you will need to supply in summary will be a business plan, or representation of the business plus objective evidence to show all assertions are true.
For example, independently ratified accounts, a copy of your lease agreement, vehicle registration documents etc. This is more work than it seems at first and is again an area where advice can be really useful as the checklist will include a number of things you may just take for granted – being so heavily involved in the business as you almost certainly will have been.
The total package being presented needs to hang together. As described in the golden rules above, first impressions count for so much in the sale, but first impressions are created by so many things in a business sale.
There are so many things you will take for granted in your day-to-day work you may not even realise that some things cause a bad impression. For example: a faded sign, an untidy office, employees smoking in front of the building, coffee cups on machines are all part of the normal working environment, but can cumulatively chip away at whatever assertions you make about the professionalism of the business.
A buyer of the business will in many cases be exposing themselves and / or any other business they run to a substantial risk when taking on a new business. They will not only want to know root and branch about every aspect of the business they are buying, they will also want to see and touch it all.
The whole package therefore has to hang together: what you say, what you do, what the business looks like all have to be seamlessly connected together in a professional looking package that provides reassurance and makes the sale easy.
This is again an area where a broker such as sell-your-own-business.co.uk can provide an essential independent eye in pulling together a checklist of actions.
For the vast majority of enterprises, a for sale sign at the front of the premises is one sure way of: scaring away customers; encouraging employees to jump ship and having your supplier credit terms changed significantly for the worse.
Confidentiality is therefore key and using a third party broker can be a good way of advertising the sale without providing any clues as to the business name or whereabouts.
At sell-your-own-business.co.uk we are obsessive about confidentiality – it is critical to our sales process and essential to provide confidence to our clients their interests are fully protected.
Potential buyers of the business may be closer than you think. Consider:
- Family members
- Existing employees
- Competitors (a broker is essential for this)
- Personal business contacts (e.g retired executives)
Failing all of the above a broker’s list may be the best option and at sell-your-own-business.co.uk we have lists of investors just waiting for the right opportunity to come along.
See also the promotion page
Is you business worth £1 or £1 million? There are many formulae that can be applied to the valuation of the business and all may be right and all may be wrong. In the end the value of the business will depend very much on the return the buyer believes they will achieve from the business and how long it will take them to achieve that return.
You will no doubt have an idea yourself of the company sales value you would ideally like to achieve. The final sales value valuation will therefore be an obvious accommodation between the buyer’s opinion of its worth and your target price.
It is at this point where a broker such as sell-your-own-business.co.uk can be really useful in carefully finding that middle ground without scaring away the potential buyer.
See also the pricing page.
Return to Sell Your Business