You have spent years building your business up, and now, for whatever reason it may be, whether it is retirement, or moving on to new things, you have decided to sell your business. Before the sale takes place, or even before you find a buyer, you can do a number of things to help yourself and your professional advisors.
From experience, we see business sales progress much quicker and swifter where the seller has planned in advance of a sale taking place. Check out our handy tips on what you can do to prepare:
1. Conduct a 360 review of your business Put yourself in your buyer’s shoes. When looking at a company, they will want to know all the ins and outs of what they are getting for their money. Consider getting your financial records and accounts up to date to ensure you have information ready when it is asked for. Are there any concerning gaps or anomalies that you need to addressed? If so, do it now, rather than wait until you have a buyer.
2. Maintain a consistent tight credit control policy
Who are your debtors? Do you chase them regularly? How does it impact on your business? A buyer will want to know that you have your credit situation under control. It also helps keep the company healthy and reduces any business risk that the business will not be paid.
3. Start thinking about who your professional advisors will be
A good team ethos between you, your solicitor and your accountant will help the transaction move along well. You need to consider appointing advisors who you trust or come recommended, that you have used before, and most importantly, those you get on well with. There is no point having a solicitor or accountant appointed if you don’t feel you can ask questions, or who explain things clearly to you. Similarly, start communicating with your accountant about your intentions - they are best placed to advise you from a tax perspective what structure suits you best. They can also advise you on the price you should be accepting and what your company is worth.
4. Consider putting in place supplier agreements
If you are a relatively new company, one matter we occasionally see is informal contractual arrangements. This may be because you could afford to put these in place at the beginning, as naturally start ups are short on cash. Over time, as a company grows bigger, it becomes a necessity to regularise the position between all parties involved. Without them, a buyer may have to consider if this leaves them at risk in any way, and what works has to be done after the deal is done. Supplier contracts done before completing a deal can be an attractive feature.
5. Consider putting together terms that are important to you before finding a buyer
Do you want to retire without any future involvement? Would you be willing to be a consultant after the sale goes through? How are you going to be paid? What are the buyers actually getting? What exactly are you selling? Start writing a list of what is important to you so you know your objectives, goal and important elements of the deal from the beginning.
Here at Nockolds we handle many company sales or asset sales from small local businesses to companies worth in the millions. If you need a confidential, informal chat to discuss your requirements, please call the Company Commercial Team on 01279 755777.