Thinking of selling your business?
Maybe you received an excellent offer, maybe it’s time to retire, or maybe you want to go and do something else. In each of these situations you will have to prepare your business for sale.
The best starting point is to work out which are the most important parts of your business and make sure that they are ready for sale.
- If your business is property or asset intensive then make sure the properties are clean and in good repair, and equipment is well maintained.
- If your employees are a key asset then make sure there are good employment contracts in place, and that key management will stay after the sale.
- If you are the key asset then you may need to identify a successor and train them up to take over if there is a new owner.
- If you are reliant on a few good contracts then check them for a change of control clause eg. supplier agreements.
A buyer will want to perform due diligence on the business before they buy it, so make sure your records are in order, your accounts up to date, and you have everything easily accessible.
- Make sure your customer database and order book are genuine and up to date, and that customers will be willing to transfer to new owners.
- Consider any loans or other debt that may need to be, or could be, paid off early.
- The sale may be for the assets of the business or for the shares if a company. Ensure you have up to date and realistic valuations that will stand up to challenge.
- If there is likely to be significant goodwill, consider how much of the profit is dependent on this, and is it actually transferable?
- Be sure you know what, how and when tax will become payable, and by whom. Remember tax law can change, so refresh this if time has passed or your circumstances changed. Some reliefs are time dependent so allow time for tax planning to maximise your benefit from the sale.
Remember, a prospective purchaser might be looking at several businesses at the same time, so yours needs to stand out. Don’t slow down and put your feet up as this is the time when you could reap the rewards of years of hard work.