9 Tips On Selling A Business
Everything created thing has a beginning and an end and your tenure of your business is one of these things. Whether for reasons of boredom, bereavement, workload, age or consolidation, you start thinking about selling.
If your business is largely free of debt, is turning a profit, and looks like it will continue to do so, someone will buy it.
So, how to get the best terms?
1. Sell when you are booming
Don't sell when you're in decline. You'll get a lower price and fewer offers.
2. Prepare in advance
Take a year. Take two. Make the business look more attractive and set it up so that, when you had over the keys, the new buyer doesn't really need you any more.
3. Get it appraised
Balance sheets and stock lists are all very well, but a neutral third-party will put both you and the buyer at ease as to what the business is actually worth. An appraiser, solicitor and accountant can be useful at this stage.
Businesses are priced at multiples of annual cash-flow. Also, transfer any personal property from the business before offering it for sale so the buyer can get a clear idea of what they'll actually end up with.
4. Make sure the company owns what you think it owns
That software you had made might be copyright the developer and not you. That building might be in your uncle's name and not the company's.
5. Get a broker
This saves you having to do the leg-work yourself and he will work to get a higher commission, so you end up getting a higher sale price.
6. Due diligence
Just who is the buyer (and the broker)? Are they a tyre-kicker, a saint, a con-man or a player?
- Some enquirers want you to spill your guts only so they can duplicate your business model;
- Some buyers want to get control of your goods and sell them off before forking over the agreed sale price, which they then skip out on;
- Some brokers don't have interested buyers - they just want to bilk you for fat transfer fees up front;
- Some will just want to asset-strip - your old employees will be laid-off down the line.
7. Create a manual
Write how to run the business day-to-day, week-to-week, month-to-month and year-to-year. Don't assume your buyer knows anything. You might be surprised at what you've got in your head, that no one else knows.
8. Get paid in stages
This may help you get more buyers but also adds a risk factor. You may want 'out' to mean 'out', also. So think about this tip before you do it.
9. Stick around
The new potential buyer will be much happier if you're to hand to help solve an unforeseen issues. Obviously, you will have to work out the terms. You don't want to become a full-time employee of your old company after having sold it!
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