How do I sell my business?
For most business owners there comes a time when you will consider selling your business.It can be quite an emotional time and you need to make sure that your end goal is always at the forefront of any decision.
Valuing your business
Before you start looking for buyers or negotiating a sale, you will need to know how much your business is worth to ensure that you get a good deal from the sale. You have worked hard over the years to build up your business, so you don’t want to accept an offer that is undervalue.
There are different methods of valuing your business which depend on your business type.
Preparing your business for sale
At the beginning of the sales process, you will usually need to provide an information pack which will include an overview of the business, headline financial information and your ideal sale terms and structure.
You will want to present the very best version of your business to your potential buyers, it is important that you have up to date management accounts and cashflow forecasts. Think of it this way – you wouldn’t try to sell your car without getting it valeted first. Now is the time to tidy up your accounts and financial information!
You should ensure that all filing requirements have been met and liabilities settled. It is also important that your business can run without you, as you will most likely be taking a step back once the sale has gone through. Now is the time to review your company processes and make sure that there are clear reporting lines. We would recommend systemising and digitalising your business as far as possible.
Finding a buyer
There are different types of buyers, you should always check that your preferred buyer can afford your sale price.
You may also want to consider if they work within your industry already and what their plans are for the business post-sale.
There are multiple ways to find a buyer:
- Approach a professional broker to find a suitable buyer
- Explore connections within your own network
- Advertise within your industry online or place adverts in industry magazines
Agreeing the terms of the sale
It is important that a solicitor is appointed to draft up the legal documents and check through any paperwork before anything is signed.
The legal paperwork usually includes the following (please note this is not an exhaustive list):
- Non-disclosure agreement at the start of the process
- Heads of terms outlining the deal and ensuring exclusivity
- Sale and purchase agreement to finalise the sale
After the Heads of Terms have been signed, the buyer will usually carry out due diligence on the company.
Once this has been completed there may be an element of renegotiation. When all terms have been agreed, the sale and purchase agreement is signed, and the consideration is transferred to the sellers.
How long will the process take?
The whole process from start to finish can vary depending on a number of factors. The amount of time depends on whether you already have a buyer lined up or how prepared you are for the sale; each business is different.
There are many steps that we have discussed above and lots of negotiations to be made with any potential buyers, but typically it can take anywhere between 6 months to 24 months for the deal to complete.
How can Ad Val help?
Ad Valorem can help at every step of the way throughout your business sale. We can assist with the pre-sales planning by undertaking a valuation of your company. We can also carry out internal due diligence to highlight any potential issues. We can also work with you to produce an information pack to submit to potential buyers.
Ad Valorem has a network of connections, we can introduce you to a professional broker to help find a buyer. We also offer support during the sales process, we can provide tax advice and HMRC clearances where applicable to maximise any available tax reliefs for the sale.
We are happy to work closely with your legal team and assist with the purchaser’s due diligence requests. We would be happy to make an introduction to a solicitor if you do not already have one.
If you are thinking of selling your business, or have any questions about any of the information above please get in touch with a member of our Team.