Steps to selling a business

 

A SIMPLE CHECKLIST TO PREPARE YOUR BUSINESS FOR SALE

 We trust this checklist and other pointers will prove helpful when selling your business. It is not intended to be an exhaustive list, simply a few things to bear in mind at the outset of the process.

 Be prepared - to price it right.

It is important that a business is properly valued and priced if you are to attract buyers but it should also achieve a price that represents a fair return for the work you have put into the business. Based on our knowledge ofthe market, we will appraise your business and advise you as to the range of price being paid for similar businesses. 

 Be prepared – To have up to date figures

Buyers and their advisers will ask for up-to-date figures. If you are unable to do this there is a high probability that your business is not ready for sale. If at any time you are unable to supply information that a prudent buyer would reasonably require then money will be coming off the table. If however you have all the current financial information readily available it sends a clear message that your business has been well run and you are ready to sell. 

 Be prepared – To make the buyer feel comfortable

 It is important to demonstrate to a potential buyer that this will be an easy business to take over. Your business broker will take over the role of preparing an Information Memorandum on the business which would normally include information on the business, background, what is does, products and profile all key customers, suppliers and service providers, financial information and other relevant information on contracts leases, staff and any other obligations. 

 Be prepared – To have things looking good

Buyers only buy businesses that are financially viable, stable and have good prospects. Businesses for sale are like homes for sale. Presentation counts! Make sure the entire premises are clean and tidy, not just the front of house. That includes the office and storage areas as well.

 Be prepared – To be honest

Tell it “warts and all”. If you lie about something or hide something and the purchaser finds out before sale settlement, you won’thave a purchaser any more. Most things come out sometime between an offer and completing due diligence. To avoid having money coming off the table later, or worse, having the sale fall over, deal with issues early in the piece.

 Be prepared – To give it time

 Businesses generally take time to sell - many businesses can take up to a year to sell from the time your first engage a broker, some longer, some shorter but it is months rather than weeks. Trying to sell in a hurry sends the wrong market signals and puts you in a weak position which means youprobably won’t achieve the best possible price.

Be prepared – To have the information, and be able to talk to it

Buyers respect vendors who know their business, and have representatives that know the business. They are far more likely to respect the asking price. Be prepared to discuss:

  •  Profit and loss accounts from the previous 3-4 years.
  • Abnormal or non-recurring costs in the accounts.
  • Abnormal or non-recurring costs in the accounts.
  • Personal drawings (including stock, if relevant).
  • The lease on the premises.
  • Leases on plant or equipment.
  • Your brochures, company literature.
  • Staff.
  • Add backs.
  • The franchise agreement if a franchise business, the franchisor and how the relationship works.