If you are looking to sell your SME then you should be aware that it can be a complicated process and one that can take a lot of time. It’s vital that you carry out the proper ‘prep work’ in order to make the sales process easy and transparent and the prospect of buying your company more attractive to buyers. If you try to sell your business too quickly, you are unlikely to get full value for it, as you will not have fully prepared your company for sale. Let’s take a look at the steps you will need to take before selling your business…
Choosing a Broker
If you plan on selling your small business then you will need to decide whether you will use the services of a broker or whether you will sell it yourself. You can choose to sell your company yourself, but there are some definite advantages to using a broker. Specialist business brokers can offer a wide range of assistance and, most importantly, will give a professional presentation of the business. Brokers will also be able to present financial information effectively and price your business accurately. They are skilled in finding buyers, working with them and, eventually, closing deals. Additionally, they will be up to speed on the legal requirements when it comes to selling a business.
Keep Running Your Company
Many people keen to sell their business will try to make changes in order to make their business a more attractive proposition for buyers. However, and as most advisers will tell you, this is not a great idea and it pays to continue running your company as if you were keeping hold of it. Changes that are made simply because you want to sell your business will be obvious to prospective buyers and will only deter them from making you an offer.
This is such an important point to remember when selling your business, as prospective buyers will want to know about sales, profits and margins, as well as expectations and forecast growth. If your books aren’t looking too healthy, then try to identify exceptional expenditure in your accounts. Perhaps relocation costs were high, or maybe a major client terminated a contract. Identifying these costs could give a fairer picture of your company’s long-term profitability and make it more sale-able.
Having a strategy when selling your business is of paramount importance. Discuss this with your management team and establish the best ways to implement this strategy. You may want to think about how you can cut costs and increase profits, as it’s important that the business is sold at a time when it looks most profitable. You should also consider factors such as your management structure (does it make sense?) as well as your IT system (is it up to date?). Making changes to certain operational issues such as these could be the difference between selling your company or leaving it on the shelf a little longer.
Making sure your legal affairs are in order before selling your business is essential, and this is where hiring a broker to undertake the sale process can be useful. You will need to ensure that your contracts are all legally watertight. This refers to contracts with suppliers, clients and employees, but also your property lease or deeds. You will also want to consult your lawyer, who can check any contracts for legal issues. You will need to ensure that your tax affairs are all in order, as any buyer will add clauses to the contract which will make you liable for any costs that arise after the sale is complete.
Deciding to sell your small business is one of the biggest decisions you’ll ever have to make, and in the current financial climate, you need to ensure that you get full value for it. This means preparing your business for sale and taking the appropriate steps before putting it on the market.