Selling your business requires a methodical and meticulous approach if you’re to obtain the highest return on your investment. For this reason, it’s a good idea to follow a checklist of actions that need completing - it will keep you organised, and help to maximise the company’s value.
So, from being clear on the reasons why you’re selling, to streamlining operational procedures pre-market, here’s a ‘to-do’ list of essential actions and the reasons why they’re important.
- Know why you’re selling
Clarifying the reasons for selling your business is an important first step. You need to be able to explain this to anyone interested in the sale - it instils confidence that there’s nothing inherently amiss within the business.
You’ll also have to decide whether you’re selling the company as a whole, or only the underlying assets. If only the assets are sold you should consider how you’ll extract the value from your business, as well as the tax implications of each option.
- Develop a contingency plan
If your original plan for sale doesn’t work out, how will you proceed? Formulating a Plan B allows you to move quickly if necessary, and optimises your chances of extracting the value you expect from a transaction.
- Decide how much professional assistance you’ll need
Receiving a professional valuation for your business from an expert who specialises in your sector gives you the best chance of finding the right buyer. In addition to a professional valuer, you’ll need legal assistance and support from a qualified accountant.
- Identify business areas that could be improved
If your credit control procedures are outdated, or the company’s accounts aren’t up-to-date, it will be reflected in lower offers from potential buyers. The time to overhaul your systems and processes, carry out compliance checks, and generally get your house in order, is before you place your business on the open market.
- How will you market the business?
You may decide to use a business broker to market the business. This increases the chances of its sale remaining confidential from competitors, and you’ll be able to maintain a level of separation from prospective purchasers. Avoiding direct involvement in negotiations also gives you breathing space to consider any offers, whilst benefitting from the professional opinion of an experienced broker.
- Sales Memorandum and Heads of Terms
An initial Sales Memorandum presents the general facts about your business, historic and projected sales and profit levels, your preferred timescale for sale, and other crucial pieces of information interested parties require in deciding whether to make further enquiries.
A Heads of Terms document is prepared when negotiations have advanced to the point where one or two clear favourites have emerged in terms of purchasers. Also known as a Letter of Intent, the document details the terms that have been agreed in principle as a result of negotiations, some of which may be legally-binding.
Our professional team at Selling My Business has extensive experience across all sectors. We can provide the guidance and support you need when putting your business up for sale, and will support you at each stage of the process.