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The right way to sell your business - Top 10 tips
February 1st 2012
The right way to sell your business – Top 10 tips
Andrew Coates, managing director of award-winning dealmakers Strategic Corporate Finance, gives his top 10 tips on navigating the maze of selling a company.
1. Once you’ve made the decision to sell, don’t rush into things. Meticulous planning and timing really are everything and can make the difference between realising the business’s full market potential or losing out financially.
2. Understand the different exit options and think through exactly what you need from a deal – how much cash you need, whether a management buyout would best achieve your goals, and whether you want a clean break, a short handover or a partial exit.
3. Remember that a quick sale will produce immediate cash but is unlikely to yield the amount that a better-planned exit strategy could have produced. Properly prepare your business for sale and avoid waiting until the last possible moment to sell.
4. Take advice from corporate finance experts at a very early stage on the current market value and how potential buyers are likely to view the strengths and weaknesses of the business.
5. Put yourself in the buyer’s shoes and rigorously examine your business through their eyes. Questions such as: how strong is the company’s position in its target market?; is the senior management team capable of taking the business forward?; is the company too reliant on the current owner? – are very pertinent.
6. Keep your plans confidential until the deal is clinched to avoid unsettling employees and clients. Don’t go for the “scatter gun” approach of approaching hundreds of potential buyers – it is unfocussed and greatly increases the risk of employees and clients finding out your business is for sale.
7. Robust financial health is the strongest selling point for any business so it’s worth addressing areas that can be nurtured into better shape. Increased profits, as opposed to flat profits, spell growth potential, which in turn boosts desirability to buyers.
8. A full order book and healthy sales pipeline will motivate your buyer and reinforce the message that the business you have launched, nurtured and grown is in tip top shape for the future. Don’t take your eye off the ball during the sales process – maintain the pipeline and order book right up to legal completion.
9. Be aware of deal activity in your sector, think internationally in terms of potential buyers and understand what is motivating buyers in your sector as strategic buyers will always pay a higher price. Make sure the advisers you appoint have the skills and database sources to comprehensively cover these important aspects.
10. Enlist the support of experienced advisers to manage the sale process and take away some of the stress of a transaction to allow you to stay focused on the business. Check out their credentials before you commission them as you only have one chance to make the best first impression with potential buyers and can only sell your business once – so you have to get it right first time.
