Selling a business is a time-consuming and often complex process. You need to advertise effectively, negotiate with potential buyers, and make sure the information you provide is reliable, all while running your business day-to-day.
It is advisable to hire a business broker to help you with the sale. They will talk to interested parties on your behalf, advise on any problems you are likely to encounter, generally freeing you up to carry on driving the business forward.
The key aspect to hiring a broker, however, is to make sure they have previous practical experience in your industry.
Retail suffered greatly throughout the economic crisis, as consumers drastically cut back on spending. Jobs were lost, both large chains and small independent retailers went out of business – the industry had to change from within.
Partly as a result of advances in technology, the last decade or so has seen a huge growth in online shopping and social media marketing, providing a global reach that allows small retailers to compete with larger counterparts.
As a result, if you are a high street shop owner selling your business, there may be a number of facets that contribute to your overall turnover, instead of the traditional income stream from a single ‘bricks and mortar’ shop.
The first document you will need to produce is the Sales Memorandum, also known as an Information Memorandum. Contained in this document should be a general outline of your business, including why it was started, how it works on a day-to-day basis, where you make your profits, and the reasons for selling.
Buyers will also need to see general financial information, although there is a confidentiality aspect here. More specific financial details can be provided once you have narrowed down potential buyers to those with a definite interest.
As far as financial information is concerned, buyers will expect to see:
Simplified financial statements including profit and loss
How the business is funded
A list of business liabilities and debts
Details of staff contracts
Financial forecasts, such as cash flow, sales, and profit
Darfield Road Stores, 142 Darfield Road, Cudworth, Barnsley, South Yorkshire S72 , Barnsley
Lincolnshire / Nottingham Border, Lincolnshire / Nottingham Border, Lincolnshire / Nottingham Border LN5 , Lincolnshire / Nottingham Border
Castle Hill Post Office, 249-251 Tonge Moor Road, Bolton, Lancashire BL2 , Bolton
Haughton Green Post Office, 107 Haughton Green Road, Denton, Manchester, Greater Manchester M34 , Manchester
"The Selling My Business team were excellent from start to finish, they helped get the best price in the sale of my construction business"
Dave T - DT Construction Limited
Obviously the best time to sell your construction business is whenever you will get the best price - however knowing exactly when this is can be extremely difficult. By utilising our expert insider knowledge and closely monitoring market trends we have the capability to recognise when it is the right time to sell your business. Different sectors of the construction industry can actually follow widely varying fluctuations, even sometimes bucking seasonal trends, so we will forensically analyse your business and fully assess its sales potential.
Also, one of the most important things that you can do is to be ready to sell your business when that right time arrives. It may sound counterintuitive but some of the best business sales come from those who have been planning their exit strategy for at least 2 or 3 years pre-sale.
Valuing a construction business can be a complex and potentially divisive process. Setting a realistic market valuation which also pleases the owner and any shareholders requires forensic accountancy expertise. Generally your construction business will be valued by using an agreed multiplier alongside EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) which measures your company’s operating performance without having to factor in financing decisions, accounting choices or tax environments. Professionally undertaking this process results in a fair business valuation being set which will stand up to the due diligence process.
However construction company valuations can also be effected by a number of other factors that can be less easy to quantify.
For many businesses in the construction sector, a large amount of their value may be tied up in the goodwill that is inherent in either the company name or with the owner themselves. Contracts may be built upon personal relationships, which could suffer once the departing owner leaves. However placing a price on what is essentially an unquantifiable asset can be very difficult. Our team of experienced construction business valuation experts have the knowledge and skills to place a fair and realistic amount on the value of your business’ goodwill.
Also if a construction business is to be sold as a going concern then a separate value may also need to be placed on plant equipment and machinery, which can then either be included in the overall price or calculated as an extra. However valuing assets is also not always straightforward. Simply estimating an amount based on original purchase price with a standard depreciation deduction often results in figures that are significantly higher than if the item were to be immediately sold on the open market, but could still be a fair valuation if the item were to continue to be a vital business asset.
There are a number of things that all business owners should do when looking to make their company as attractive to potential buyers as possible; keep your books up to date, build up a strong credit score and clear any debts. However many construction companies will also need to address a number of other more sector specific issues.
Contemplating selling your business? Our free, comprehensive guide will walk you through how you can sell your company. Our FREE guide covers all of the essentials, including:
Plus much more...