Preparation is critical when selling your business
If you are thinking of selling your business, preparing for sale is critical. It has a profound effect on success.
Unfortunately, most businesses who begin a sale do not succeed at first attempt. The decision to sell is therefore not without risk.
For those who do not sell but nevertheless get a long way into the process, it can be extremely distracting. Perhaps most disruptive, however, is the emotional impact of planning life after sale, only to see those plans not come to fruition. Regaining your energy and enthusiasm for continuing to run your business can be difficult.
Still the best way to release value
Despite these uncertainties, selling remains the best way to release the value locked in your business in a single transaction.
The good news is that selling a business can be made much more certain. The causes of businesses failing to sell are largely addressable before a sale process begins.
Preparation to sell is critical to success
Preparation to sell your business is critical to success, to know that you have done everything to reduce or eliminate risk.
Most business owners have typically not deliberately prepared for sale. You will know if that is true of your own business, but it is perfectly understandable.
A successful and rewarding business during normal trading conditions may not translate into a saleable business in the eyes of an acquirer. Effective preparation for sale can only happen if you know how an acquirer perceives risk. That is not something any business owner would usually concern themselves with.
There are three questions you should seek to answer before formally commencing a sale:
- Is my business saleable today?
- Who will buy my business?
- Is now the right time to sell?
Attempting a sale prematurely and then not succeeding is a very expensive way to discover the answers to these three questions.
How to answer the key questions?
The way to answer the three key questions is to talk to the market of buyers first. This is best done by a third party to protect confidentiality but also to ensure the right questions are asked. The aim is to secure detailed and relevant insight which you can act on.
This insight can act much like a template against which to assess your business strength as an acquisition target. Equipped with this knowledge you will be well placed to react. You can undertake ‘preparation for sale’ work which you know will de-risk your business and increase its attractiveness [and value] in the eyes of a buyer. You can also sell at the right time.
Smoother and quicker
Adopting this approach, we advocate, will ultimately deliver the smoother and quicker transactions, and all parties want that.
- Your business will be shaped to sell
- It will be de-risked and more valuable in the eyes of the acquirer
- Ready for the scrutiny of due diligence
- Positioned ahead of less well-prepared targets
This approach may seem common sense but remains all too rare.
Most people sell a business only once in their working life. Why not do everything you can to get selling right first time?
