Selling with Confidence: Expert Tips on How to Sell Your Business

Are you thinking of selling your business?

For most people it’s something to consider when you start thinking about retirement, perhaps a new opportunity has arisen, or – of course – some people start their business with a clear plan to build it up for sale. Whatever your situation, selling your business is a complex process – so, what do you need to know?

We recently spoke to Tracy Bradley of The Haversley Group who helps her clients sell their lettings and estate agencies. She’s shared her tips for making sure you and your business are ready for sale.

Selling Your Business, Step by Step

In this blog, we’ve outlined the steps to follow for a comprehensive exit strategy – preparation, planning and process.

Step One – Get Ready

Even before you start planning, you need to prepare – to know what you’re planning for. As well as considering the aims of your sale, you’ll also need to think about any dealbreakers. What are your must-haves and what can you live without?

Personal Considerations 

What are your personal plans and how you will finance them?

If you’re looking to start a new venture the financial considerations will be very different than those required for retirement in the sun. Think about this honestly and you may want to talk to any partners – in your business or relationship.

You should also consider whether you’ll be looking for a lump-sum payment when the sale completes or would consider phased payment and under what conditions.

Business Considerations 

Are you ready to leave the business completely or would you prefer a partial sale? This may depend on how much money you’re hoping to make or your readiness to give up the company you have built.

Do you want some element of control over the brand or the business after you’ve gone? What about the people, do you want to have a say about how your employees are treated?

What if you are the business? If you’re a solo or freelancer, is there any option for you to sell the company you’ve built? Well, this will depend on your assets and – for service-based businesses – your most valuable asset may be your client list. If you hope to sell this on, however, think about how potential buyers will look after your clients after the sale.

At this stage, it’s also important to consider how and when you’ll communicate your intentions to those in your business. While you don’t want to worry anyone by talking about the sale too soon, there may be members of staff whose support you need and some in the team may be close enough to see there is something going on behind the scenes. While there’s no set answer to this question, considering it early and planning will help.

Step Two – Get Set

You’ve done some preparation, now it’s time to start planning.

Timescales

Selling a business won’t happen quickly, often taking 9 months or more. Do you have a deadline you’re aiming for? If you want to be on the beach by the end of the year, make sure you plan for that!

You should also think about any implications of the timing of the sale – is it a seasonal business? Is the year end a consideration? How does the calendar year impact your customers or potential buyers, as well as your own business?

Evaluation

Talk to the right experts to understand your current position – that might be accountants, tax specialists, brokers, management consultants, solicitors, financial advisors. Make sure you have a clear understanding of where the business is now and if there is scope to make simple changes to improve your offering.

Carefully consider any potential improvements or actions to mitigate risks, it’s important to understand the costs versus value offered by improving your operations or otherwise developing the business. For example, does it make sense to be VAT registered? For some businesses this might offer an opportunity for growth so going through the processes before selling would increase the value of your business.

Have you identified your key personnel and done appropriate succession planning? Effective succession planning provides huge value to the business and your buyer.

Can you demonstrate future growth opportunities? While past numbers are useful, buyers will want to see what opportunities are available for the company to grow – as long as these are realistic.

Due Diligence   

To successfully complete your sale, it’s essential you’ve done due diligence, providing reasonable assurance of your position to any potential buyer. Ensure you know what documentation, accounts and legal considerations are necessary for the sale.

You will also need a non-disclosure agreement (NDA) in place by the time you are talking to potential buyers.

Step Three – Go

Once you’ve done your preparation and planning, you’re ready to start the sales process.

Business Valuation

To sell your business, you’ll need to know what it’s worth. Getting an expert business valuation will give you and your potential buyers confidence, as well as ensuring there is a clear understanding of what is included in the sale.

If you choose to do this yourself, there are various tips online based on the kind of business you are doing and the current market.

Finding a Buyer

How will you find a buyer for your business?

Perhaps there is someone within the company who wants to take it over. A management or employee buyout can seem like a simple solution as this person knows the business already. You’ll need to handle such a sale carefully, however, ensuring existing relationships don’t disrupt the process.

Unless you already have an interested buyer, it is likely you will have to market the sale. You can either use a broker or market your business yourself.

Engaging a broker can be a sensible option bringing experience in sales of this kind and the knowledge of how to manage them. They will also allow you to avoid the additional work of managing the sale so you can keep your focus on running the business.

If you’re selling a small business, however, and feel a broker is unnecessary, you can market and manage the sale yourself. A starting point might be to identify and contact potential buyers – maybe a dedicated customer, supplier, or competitor. Local accountants or lawyers may also know of parties interested in such a sale. You could also use an online listing site – a bit like Rightmove for businesses. Managing the process yourself allows you to keep control of the sale and removes the cost of a broker’s commission, but can be time-consuming and stressful.

Offers and Negotiation

How will you handle this?

If you employ a broker, they will manage offers and negotiations for you. If you are handling the sale yourself, you will need to understand how to handle low offers and be realistic about the figure you’ll accept. This can be difficult when managing the sale yourself as handling the sale of something you’ve built can be emotional.

The Deal

What does it look like?

You will need:

• Heads of Terms – not a legally binding document but provides clarity, for both sides, on what’s been agreed.
• Sales and Purchase Agreements which cover the terms of the sale.
• Bill of Sale which transfers the business assets to the buyer.

These documents are likely to be legally complex and difficult to agree so professional legal services are often required.

Planning Your Exit

Hopefully these tips will have given you an idea what you need to get your business sold. Thank you to Tracy for all her help.

Whether you are ready to sell your business imminently or thinking ahead to the future, you may be looking for expert help. Networking can help you find the guidance and support you need at times like this. Within our membership at Your Business Matters we have accountants, commercial solicitors, financial advisors, management consultants and more. Make sure you have the right team to support you.