Deciding to sell your business is a momentous milestone in your professional life. Not only that, but it can be a complex and intimidating process, with several significant hurdles to jump along the way.
As a result, it’s vitally important that you are prepared for the process – and that your company is too! To help you kickstart your selling journey from a firm foundation, here are the top 5 things to consider when selling a business.
1. You should prepare well in advance
Before you even start focusing on how to sell your business, it’s important to lay the groundwork to ensure everything proceeds as smoothly as possible. Ideally, this preparation will take place at least six months before you are planning to start selling. You will need plenty of time to ensure that:
- You have a robust team in place to keep the business functioning effectively throughout the sales process and after.
- You have all the relevant legal and financial advice from experts to assist you with coming up with a suitable deal.
- Any disputes you may have, have been effectively settled.
- Your paperwork is all in order, including contracts and accounts.
You should also dedicate some time to tidying up the business physically as well as structurally and financially. This means fixing any broken equipment and sprucing up the premises, inside and out, to make it as appealing as possible to potential buyers.
2. Make sure you understand the tax implications
There are a few vital tax-related matters you will need to be familiar with as you go through the selling process, so it’s important to speak to your accountant.
For example, there is the question of capital gains tax, which will apply if you make a profit from selling your business that surpasses your tax-free allowance. It’s important to thoroughly research CGT as you will need to report it when you make the sale – it is not automatically deducted by HMRC like your income tax.
Following the Autumn Budget, which was announced in October 2024, basic-rate taxpayers will pay 18% CGT while higher-rate and additional rate taxpayers will be subject to a 24% tax.
The current CGT allowance is £3000 for individuals and £1500 for trusts.
To help you work out how much you may owe once your sale is completed, you can use this calculator.
3. Have your business valued
Another important thing to consider when it comes to selling a business is how much your business is worth. This will be a key piece of information for both you and prospective buyers, so it’s crucial that you carry out an up-to-date valuation that will give you a clear idea of your company’s true market value.
If you’re not sure how to value a business, there are several tried-and-trusted methods to consider.
Once your valuation is complete, you will be able to set an appropriate price that ensures a fair ROI when you sell.
4. Use a business broker
If you’re finding yourself frantically wondering ‘How do I sell my business?’, the good news is that there is expert help available for you to rely on.
Experienced business brokers, like our team at Harris Acquire, can take over the entire process, making it as simple and stress-free as possible for both you and your prospective buyers. We will do everything from making the initial contact to preparing a high-quality information memorandum and assisting with the negotiations, due diligence, and completion.
By hiring a business broker to take responsibility for your sale, you leave yourself free to concentrate on preparing the business for your departure.
5. Prepping for due diligence
Finally, while an expert business broker can shoulder much of the work of the sale on your behalf, you will still need to make sure that you are prepared for the due diligence process.
This preparation entails:
- Preparing all your financial documentation dating back at least three years.
- Providing clear information about the property and other physical assets – such as equipment or machinery – that will be involved in the sale.
- Paying off liabilities, or, at the very least, clearly divulging them to prospective buyers.
- Reviewing all your contracts to make sure they are accurate and up to date.
The due diligence process is vitally important to the success of the sale, so you need to make sure everything is in order, and you can answer any questions or concerns your potential buyer may have.
Failure to adequately prepare could result in serious problems down the line and possibly even result in the loss of the sale as the would-be buyer may be discouraged by any gaps or issues with your documentation.
How to ensure a straightforward sale
There’s no denying the complexity and hard work involved in selling your business successfully. However, the good news is that expert help and advice is at hand.
Here at Harris Acquire, our friendly and knowledgeable team is available to take over the selling process from start to finish and help you get the best possible deal while enjoying a smooth and stress-free exit from your company.
To find out more, do give us a call on 01926 757100 or email us at Hello@harrisacquire.com. We look forward to hearing from you.