Selling companies used to be a difficult process, a skill offered by a small handful of experienced companies and sector specialists. Yet, times move fast and with the new ‘knowledge economy’ taking over, it’s time for every business owner to take a hard look at your options.
If we break down the process of selling your company these are the steps you need to evaluate:
So, let’s look at how you can can take control of the process.
Preparing for the sale of your business should have already started. Even if your business is not for sale, you should be focusing on the fundamentals for your company, namely:
It may be that an external advisor can best help you with these things, but equally with modern accounting systems and technology, it has never been easier to keep on top of your company and make dynamic decisions. The challenge is, can you make the hard choices count in terms of cost-savings? Or take the risks needed in growing your company?
You have everything you need to sell your business. It’s all the financial and business data that you and your accountants already have at your disposal. All businesses are sold based on the data which makes up the accounts and operations of the business.
It does, however, need significant repurposing to support your business sale.
Company sale documentation, such as your anonymous profile and information memorandum, need to have a dual purpose. Firstly, they do need to communicate a fair reflection of your company. Secondly, they need to present it in the most favourable light.
If you choose a sale advisor, then they will produce such documents for you, if you ask us for help, we might send you some free business sale templates.
Even if you choose not to share your business valuation with prospective buyers, it is important to have an understanding of the expected range of valuation of your company. This can help you set your own expectations and planning for the future.
The chances are if you have been approached by a Sale Advisor, they will inflate the valuation figure, or even persuade you that it is not necessary. Be careful to understand how they have arrived at a valuation and recognise that it is in their commercial interest to give you a higher valuation. After all, they want you to believe they will give you the best return.
Whilst companies can occasionally command greater multiples, there have to be compelling reasons for this.
The ability to promote your business is fundamental to receiving a fair offer for your company. Ideally, if there is more than one party interested, then you may well secure a more favourable offer.
However actually promoting your business is something you could do, in these ways:
In today’s world the reach of the Internet and the accessibility of high-quality business data means that it is all at hand for you.
The biggest challenge you will have is to pick out the most likely buyers when you start receiving interest. The three main tests they need to pass are:
Once your suitors have passed these tests then it is on to negotiations. Once you have had one or more meetings you should expect them to make some kind of indicative offer. In almost all cases they will start low, and it’s up to you to manage the process of increase in offer to a satisfactory point. However, direct negotiations often realise the best result in the end.
You may be surprised to hear that about half of the deals which enter due diligence never complete. Whilst there are many reasons why deals fall through, finishing well is normally a result of two key ingredients. Good relations between the two parties, and no surprises for the acquirer.
Once you’re on that final track, supply all information quickly and as thoroughly as you can. Answer questions, provide evidence and try to give accurate and measured responses to the buyer.
It may be, after reading all of this, you are steeled in your resolve to sell your own company. We wish you every success in this matter.
If you want help, then talk to the team – we can help you manage the company sale process, from start to finish.
Explore the options available to you, improve your chances of successful sale.
If you’re seeking a business to buy, then we can increase your deal flow.
In the early stages of such an important undertaking, it can be a bit of a moral maze: who do you trust?
Firm Gains gave me confidence with detailed advice and support. I would recommend their services to other entrepreneurs seeking to buy a business.Mr T Washington , Founder
I found it much easier to get my head around a business sale this way than talking to my accountant. You speak a language I understand!
Even though the whole process of selling seems daunting, I’ve got more confidence that I’m heading in the right direction.Mrs T Boothe , Founder
Thank you for your email and the excellent advice provided earlier this week. It was immensely helpful and has helped me to plan my future direction for the practice.
I would have no problem whatsoever in recommending your services in the future.Mr & Mrs Halldron , Co-Owners
Firm Gains were recommended to me and I was not disappointed. They were efficient, helpful and effective responding quickly to my request with all the facts that were needed to ensure a stress-free dialogue with our buyer.
What really helped was the advice over and above the valuation, which was immensely valuable and gave me the confidence to proceed. I would not hesitate in recommending them.Mr C Waite , Founder
We found the advice invaluable, which was clear and concise and felt your firm had a good handle on market trends and business sectors.
With also the backup of the secondary services, there was a feeling you had all bases covered if we wanted to proceed with our exit via Management Buy Out (‘MBO’).Mr D Wills , Director
Thank you for your advice. I was just about to sign up to the wrong kind of business agent for a company of our size, but read your post just in time.
I found a more serious partner, with experience in our industry and we’re already using the same language.Mr F Summerscale , Managing Director
We have been greatly impressed by the clear and impartial advice given to us by Firm Gains. After just an initial phone call we felt much better informed, with a new awareness of the many options available to us.
Firm gains understood our situation quickly and clearly and were anything but ‘pushy’. Refreshing compared to what we’d experienced before.Mr C Hutcheson , Managing Director