It’s the moment that many entrepreneurs dream of – the chance to put their valuable business up for sale and to move on to their next challenge. But for many it’s also a difficult time – it’s easy to become emotionally attached to a project that has taken up so much of your time, money and effort. Making the commitment to sell, and then choosing the right time to put your business on the market isn’t a simple decision – so we’ve put together a few tips that we hope will make the whole process a little bit more straightforward. Here’s our quick guide to selling a business in the UK.
1. Make sure that now really is the right time
Putting any emotional attachment aside, it’s well worth just making doubly sure that the timing is right to put your business up for sale. Be completely honest with yourself about why you’re making the decision to sell now, and take an objective view on what is best for you as a seller. We also don’t recommend selling your business just after you’ve made lots of long-term investments (as you won’t get any benefit from them) and it’s also important to not just look at your current profits. If there’s a definite cycle to the way your business operates then potential buyers will want to see how it performs over the whole year – and even in the longer term.
2. Hire a professional
So, you’ve made the decision to sell, and the timing feels right. Now it’s crucial that you bring in professional help to ensure the whole process runs smoothly. Getting a qualified business transfer agent (BTA) on board is highly recommended – they can make sure that you cover all the bases properly. They’ll help you to value your business accurately – basing their estimate on everything from cash flow, revenues and profits as well as the value of your assets. Remember that a valuation ultimately is just a ‘best guess’ by a professional – so once again choosing that professional well is critical. Another key thing to consider at this stage is how much of your business you actually want to sell – whether it will be a complete sale, a partial sale or even just a sale of assets. Your BTA should be able to give you more advice on what might be best for your specific business.
3. Be prepared
Again, your BTA will help you here – but it’s essential that both you and your business are ready for the sale. Prepare answers to the questions that potential buyers are most likely to ask you – not least, why you’re selling the business in the first place. If they suspect that it isn’t viable or is just performing badly, then you won’t get far. So, make sure you explain your motivations clearly and honestly.
It’s an area that will take some delicacy – it’s important that they feel that they personally will be exactly the kind of fresh blood that the business needs (if that’s your motivation) or that they understand that you’re reluctant to sell but excited about your new venture (again, if this is why you’re selling). Reassure them, and make them feel excited about the opportunity you’re offering them. Finally, make sure the business itself is in a fit state to go on the market – both physically, in terms of any assets like properties, and financially. All your records need to be completely up to date, filed correctly and as transparent as possible.
4. Put it up for sale, negotiate, and close the deal!
Your BTA will help you to create a sales package that is best suited to your business before advertising it widely across several channels. Once the offers start rolling in, it will be important to assess the credibility of any prospective buyers before entering into any negotiations. We’d also recommend getting them to sign a confidentiality agreement too. We think that this stage is where a professional such as a BTA really proves their worth, acting as a valuable intermediary in any negotiations. Once you’re happy with the buyer’s offer, you’ll need to go through a process of due diligence to make sure they can back up their claims. This is a crucial stage – it’s your chance to make sure that this person is who they say they are – and whether they are the right person to buy your business off you.
Finally, close the deal – the buyer will sign a binding contract of sale to ensure it all goes through properly – and you can finally celebrate before looking ahead to your next venture.
