Selling your Business

Preparing to sell your business

Is selling my business the right option?

Before putting your business up for sale you must give careful consideration to your reasons for doing so. You will probably be asked about your reasons for selling by potential purchasers, who will need to be comfortable with your answers.

Selling part or all of the business may be the best way to achieve your objectives. You might, for instance, want to sell your business outright, leaving you with no financial or management involvement. For more information, see the page in this guide on ways to sell your business.

But a sale may not always be the best solution. And, of course, it may not always be realistic either - for more information, see the page in this guide: is a sale realistic?

There's a range of other exit routes that may suit your needs better. If, for example, you want to retire but already have enough money, you could pass the business on to your children. You could sell to your employees. Or you could try a stock-market flotation which could give you access to capital to develop your business while making it easier to sell part of or your entire stake in the business.

key questions:

You must consider four key questions:

 

What are my objectives as the owner of the business? For example, you might want to realise some or all of your investment in the business to fund your retirement.

What are my objectives as manager of the business? For example, you might want to retire as soon as possible or prefer to have an ongoing involvement with the business.

What are my objectives for the business itself? For example, the business might need new investment in order to grow.

Who else will be affected and what will they want? For example, other shareholders, managers and employees, and even key customers and suppliers.

When to sell your business?

Selling at the right time can have a significant impact on the price you get for your business.

If possible, plan ahead so that you can pick the best moment rather than being rushed into a quick sale. For example if you plan to retire in five years' time, it's a good idea to start planning the sale of your business now.

However, it's a good idea to keep your plans confidential until the sale is imminent. This will prevent a negative reaction from customers and suppliers and eliminate unsettling and unnecessary worry for your employees.

The general state of the economy

The general state of the economy - and your sector in particular - can have an effect. It's easier for a trade buyer to fund a purchase when their own business is doing well, interest rates are low and banks are keen to lend.

Timing

The detailed timing of a sale may also depend on the tax consequences, and any forthcoming changes to tax rules.


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your business

The state of your business is a more important factor. Aim to sell when profits are increasing and look likely to grow further. Consider the impact of sales cycles or seasonal fluctuations in your business - you might have fuller order books at a particular time of year, for example.


advance Planning

Planning well in advance also allows you to groom other aspects of your operations to ensure your business is as attractive to buyers as possible. It can also highlight any issues which might have an impact on a sale. For example, you can ensure that equipment is well-maintained, key contracts are in order, that there is no outstanding litigation or unresolved disputes and that you are complying with all legislation.