How and when to sell your business
It’s a good question. When we’re talking to business owners, the questions of succession and exit frequently come up in conversation.
Owners understand that a profitable, systemised business with a history of solid repeat forward orders, will likely command a good sale price. By asking probing questions it often becomes clear that while they understand that principle, the reality is the business falls short in some key areas. Consequently, the business becomes a ‘hard sell’ at a lower price than anticipated.
Plan to succeed
First, a realistic strategic plan is needed to put a good succession/exit together which will be a win-win for both parties. Two things happen – you receive the best price and the buyer has a good business.
All too often an owner looks at selling when they see profits falling. Their enthusiasm and passion wane to a point where they have no energy or desire to make the changes to improve. Unrealistically, they hold on to their vision of a high selling price.
Timing is everything
Timing your decision to sell is often crucial. Allow time to develop and put in place strategies that will improve the value in order to get the ‘best price’.
Being ‘sale ready’ often requires an independent third party to complete a whole-of-business review. That’s people, processes and financial state. A good review can highlight any potential areas of concern and eliminate them to improve value.
Get a marketing strategy
Determining a suitable marketing strategy involves a number of well-planned stages including:
- Being in the best ‘sale ready’ position.
- Deciding on sale strategies and identifying the target buyers
- Providing a documented value proposition to include:
- Documented business systems
- A developed business profile
- An established rationale for the value you determine
- An independent business valuation
- A business plan and a due diligence checklist
- An IM (Information Memorandum). This highlights the benefits of the business as an investment opportunity to the potential buyer,
- Drafting Heads of Agreement following the conclusion of negotiations.
Avoid stress
Planning well ahead with time to execute any actions to improve the value of your business is a sound policy that helps to eliminate the stress of a sale process. An Advantage Business Advisor can help you prepare for and time your sale for the best result.