Sell your Business - Part One

Also read: Business Turnaround | Trading Out | Refinancing

Apart from the emotional feling of selling a company you have spent years building up but it can also be one of the most important and difficult financial deals in your life.

Is selling my business the right option?

Before you sell your business you need to consider your aims and objectives regarding your business:

• Consider your objectives as the owner of the business? i.e changing direction, retirement.
• Consider your objectives as manager of the business? i.e. retire or keep running the business.
• Consider your objectives for the business itself? i.e. business needs investment in order to grow.
• Consider who will be affected and what will they want? i.e. managers, employees and key customers

Ways to sell your business

Most businesses are sold in a trade sale to another business. Alternatively, you may be able to find a private-equity buyer. For example, a venture capital firm might be prepared to help your management buy the business. There are several different sale options:

Partial or full sale

Although you may want to sell your entire stake in the business, a potential buyer may often want to purchase only part of the company. This means that you continue to run the company, giving the buyer confidence it will do well.

Sale of assets

You can sell assets such as equipment, intellectual property or your customer list rather than selling the business itself. This may be attractive to a purchaser who does not want to take on liabilities and obligations. For example the purchaser might not want to take on your employees. You will be left with whatever assets and liabilities are not included in the sale.

Is a sale realistic?

If you are considering selling your company then make sure someone would have good reasons why should buy it then it won't sell.

• If the business is not healthy then you may have trouble selling it. Potential buyers might wait for the company to fail and then get your assets at a knockdown price.
• Buyers like well-organised businesses with strong management so make the business look attractive.
• Buyers prefer a business to have a good financial record with good growth potential.
• Identify potential trade purchasers and a good reason why they should want to buy your business?
• Are the existing management team interested in buying the business?
• Start planning a sale well in advance by getting a preliminary valuation before you offer it for sale.

When to sell your business

Selling your business at the right time will play a large part in getting a good price for your business:

• Try to plan ahead instead of rushing for a quick sale, for instance if you are planning to retire in several years time, you should start planning now.
• The sale of your business not only depends on the state of the business, but also the general state of the economy, and in paticular the sector your business is in. Low interest rates and a healthy economy can all help you sell your business.
• Try to sell when profits are high - and rising or when your company is in its busiest period.
• Ensure that equipment is well-maintained, key contracts are in order, and that you are complying with all legislation to make an attractive purchase.