Selling your business

23rd November 2010
Author: Guy Rigby, Head of Entrepreneurs

The Challenge

To maximise value from the sale of your business, whilst managing a smooth and timely process.

---

The Solutions

Prepare your business for sale

• Reduce owner dependency and strengthen the management team, if necessary
• Ensure all relevant paperwork such as statutory books, leases, employment contracts are up to date
• Prepare an integrated financial forecast (including key assumptions, balance sheet, profit & loss and cash flow statements) for the next three years
• Reduce unnecessary spending but ensure that appropriate investment is made to support forecast growth
• Identify one off items that affect profits,  eg unusual bonuses

Use a third party to manage the sale process

• Agree a strategy for sale, including who to approach, when to approach and how to approach
• Agree a base line price with your adviser
• Make sure they are incentivised to maximise value, manage the process and focus on key issues
• Use them to negotiate, acting as a buffer between the parties
• Be prepared to step in if there is a deadlock, but consult your adviser first!

Understand what is important to you

• Price
• Business continuity
• A clean exit
• Paying less tax

Marketing the business

• Be realistic about the strengths and weaknesses of your business
• Consider whether your management team may be appropriate purchasers of the business and can attract appropriate funding (MBO)
• Keep your eyes and ears open for potential third party approaches
• The best buyer is often the one you want to sell to the least as they may have the most to gain from the sale

If you’re thinking about selling your business, contact Guy Rigby on 020 7131 8213, email Guy Rigby or register here to arrange a complimentary corporate finance surgery to assess and discuss your options.

Disclaimer

By necessity this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Article correct at time of writing.

Contact us

This document is part of the Entrepreneurs' Toolkit series, produced by Smith & Williamson and external contributors. More information on this and other toolkit topics is available at www.smith.williamson.co.uk/entrepreneurs