Selling a business is a transaction that can have a profound impact on one’s life and thus represents a pivotal moment for any business owner. Therefore, being thoroughly prepared for this process is crucial. Here, we aim to offer some valuable insights into preparing your business for sale, with a view to enhancing your chances of success.
Firstly, it’s imperative to establish clear objectives. The misalignment of objectives among shareholders often leads to failed sale endeavours. Identifying what you aim to achieve from the sale is more than just agreeing on a selling price. Considerations such as timing, the percentage of the stake to be sold, the shareholders’ ongoing involvement (if any) and the welfare of employees post-sale should all be thoroughly addressed. These objectives will shape your exit strategy and influence the types of buyers you engage with.
Secondly, you should conduct a comprehensive health check of your business to address any underlying issues. If a buyer uncovers unexpected problems during the due diligence process, this can derail your business sale. Areas such as intellectual property, employment practices, compliance with health and safety regulations and tax matters should all be scrutinised to pre-empt any potential complications.
Next, compile a list of potential buyers tailored to your objectives and chosen exit strategy. Identifying interested parties with the financial capability to make an offer is crucial, but can be challenging – particularly in the SME sector where relevant information may not be readily available. Utilise resources such as databases and professional networks to create a qualified list of potential buyers.
Subsequently, prepare all the necessary marketing materials, including a concise prospectus or teaser document, to generate initial interest from potential buyers. This document should provide essential information about your business, highlighting its unique aspects and key financial metrics. Additionally, prospective buyers should be required to sign a Non-Disclosure Agreement (NDA) to maintain confidentiality throughout the process.
Finally, organise all your business’s financial information into a comprehensive data book (typically an Excel spreadsheet) to share with potential buyers during the sale process. This detailed compilation should include management accounts, reconciliation with statutory accounts, adjustments for exceptional items and breakdowns of revenue and gross profit.
At S4 Financial, we work closely with Bluebox Corporate Finance to help clients navigate their business sale and ensure that the process is also aligned with their own personal ambitions. If you have any questions about selling your business, you can get in touch with us directly. Alternatively you can contact Bluebox Corporate Finance directly for a confidential, non-obligatory conversation via this link, by emailing info@blueboxcfg.com, or by calling +44 (0)203 924 5150.
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