If you have decided that the time has come to retire, or if you simply want a change of direction and you’re wondering “How can I sell my business?”, then you’ve come to the right place.
Our essential guide will provide you with plenty of top tips and insights on how to sell a business with as little stress as possible, while hopefully ensuring you get the return on investment that you deserve.
So, without further ado, read on for our top tips on how to ensure a smooth business sale so you can move seamlessly on to the next chapter of your life.
1. Make sure your business can cope without you
It may sound obvious, but arguably the most crucial step you need to take when preparing your business for sale is to make sure that it can function well without you at the helm.
It doesn’t matter how successful your business may be – a prospective buyer won’t look twice at it if it’s clear that its success is entirely reliant on your presence. After all, acquiring a business is a significant investment, and they won’t want to take on an organisation is clearly dependent on your leadership.
So, how do you make sure your business will continue to flourish when you are no longer guiding it? The simple answer is to hire an impressive management team, if you don’t have one in place already. In particular, you will need an experienced and talented MD who can run the show effectively once you have exited the business.
2. Organise a valuation
Another important step when it comes to how to sell a business is arranging a valuation. It’s crucial that both you and your potential buyers know exactly what your company is worth, to ensure a fair price for both parties.
There are different methods you can use when it comes to the question of valuing a business. These methods include:
- Discounted cash flow
- Asset Valuation
- Price to Earnings Ratio
However, you may prefer to hire an appraiser to draw up a detailed appraisal document of your company’s worth.
Before you begin the valuation, take some time to get all your financial ‘ducks in a row’ and ensuring that your financial records are accurate, up-to-date, and don’t contain any worrying black holes that could put off a potential buyer. You should also familiarise yourself with the most important facts and figures, such as your projected FY turnover and EBITDA and details on your market position, client base, and existing supply chain.
3. Find a business broker
One of the simplest things you can do to ensure the smooth sale of your business – particularly if you’re selling it to anyone other than a family or staff member – is to hire a business broker to take on the task for you.
After all, there are several different hoops to jump through to successfully sell a business, and a tried-and-trusted business broker like Harris Acquire will have the knowledge and expertise to make the process as straightforward as possible.
What’s more, leaving the sale in the hands of a business broker will give you the opportunity to concentrate on continuing to run your business while honing your exit strategy.
4. Consult with your clients
If you have a well-established customer base, it’s important to communicate with them regarding your proposed exit well in advance of the fact. Communication is vitally important in any significant business situation and can help smooth the way if it is handled with care and diplomacy.
Inform your clients that you are planning to exit the business some months beforehand and offer them as much reassurance as you can about the way the business will continue to be run, both during and after the sale.
This will hopefully ensure the continuing loyalty of your clients, which, in turn, will be a positive factor for would-be buyers.
5. Get organised
As well as your financial records, you will need to have all your business paperwork in order by the time it comes to sell, as your buyers are sure to engage in due diligence and will require access to it all.
Having the appropriate documents ready to hand (including title deeds, customer agreements, IP rights, and contracts) will help to streamline the selling process. Not only that, but it will also make a favourable impression on the buyer.
6. Plan your new chapter
While you are preparing your business for sale, it’s a good idea to lay the groundwork for your next chapter. Think about what you plan to do once you have moved on and how much money you will need to accomplish your new goals.
It’s also important to decide how quickly you will be stepping away from the business once the sale has been formally completed. Will you stay for a few months to oversee the handover, or will you leave your MD in charge?
Careful planning is essential to make sure the whole process goes as smoothly as possible for all parties involved.
To conclude
The prospect of selling your business is likely to be fraught with a blend of excitement and anxiety, particularly if you have been running your company for many years.
The good news is that it need not be a stressful experience. With the right assistance and expert advice, the journey from sale prep to completion can be smooth and straightforward.
Here at Harris Acquire, we specialise in helping people buy and sell businesses and receive the best possible deal for their investment. If you would like to learn more about our services or if you would like to talk about hiring us to help you broker a suitable deal, don’t hesitate to get in touch. You can send an email to Hello@harrisacquire.com or give us a ring on 01926 757100.