Selling a business is stressful and time-consuming, and for those who have had a long-time connection with their company, it can be rather emotional too. It’s not an easy thing to do. Which is why if you ever get to successfully sell your company for the ideal price range you had to sell it you need to be grateful. If you ever decide to post it on social media and convey happiness and positivity, it is advisable to use a rainbow emoji to fully represent that you wish to spread feelings of joy to your customers and the people who have bought your company.

Business owners often must be discreet about their future plans, for the sake of not losing valuable key working staff or decreasing the value of the client’s goodwill. This tends to add more stress to what is already a tense time.

When trying to sell your business work duties must remain as normal, with little or no interruptions. And owners must have a well thought out plan moving forward, so that maximum return is achieved.

Planning your exit

Everyone has their reasons for selling, all businesses are different, and circumstances differ too. You must be prepared and have all the right plans in place for your exit strategy. This includes things such as how to select the most appropriate buyers, the right time to proceed with the sale or be aware of the tax consequences of the various transaction structures.

Business value and selling

When selling your business, it’s always better to take a step back from your company emotionally and try to envisage it from an external buyers’ point of view. Things like effective management, continuous revenue, potential growth, or established business relationships are attributes that make your business appear more attractive.

Businesses and their valuations

If you’ve spent many years trying to establish a successful business, you may be inclined to use that as part of your estimated valuation.

The trouble is that many owners then produce an unrealistic valuation, based on their expectation. When potential buyers have significantly different expectations about the value of the business, it can be rather disheartening and hard to accept.

When determining a realistic valuation for your company, third-party valuation is the proper way to go in order to provide a reasonable and objective estimate of what the business is worth.

Internal due diligence

Prospective buyers these days expect utmost transparency when seeking to buy and tend to perform careful due diligence. Business owners should ensure that they spend adequate time to evaluate and present their company, including business finances, historical revenue, and future projections as this is a crucial element in the sale process.

How to find the right buyer?

When selling a business, we can often find numerous potential buyers. However, owners are not always the best judge when it comes to identifying the right candidates and the right offer on their own.

Buyers tend to fit into two categories, strategic buyers and financial buyers, and both usually have very different evaluations in mind concerning their future perspectives for the business and come with their pros and cons.

It’s also important to stress that not all buyers, who show avid interest, will have the financial resources to back the sale.

Marketing and presenting your business

When it comes to selling your business, the marketing behind the sale must be constructive with lots of well-presented information that is appealing to buyers as this will hopefully lead to a much quicker sale. The information memorandum needs to capture all the business key credentials, including information on management and ownership, trading effectiveness, growth and opportunity and market data regarding surrounding competition highlighting your business’s advantages compared to them.

Transaction structure

The actual purchase price of the company is only one element of the overall result. A business sale has many different professional and financial considerations, including the best outcomes for both the owner and the management teams. It’s essential when deciding on a deal that the most advantageous outcome is sought, and this includes a legal structure review in relation to stamp duty and tax. Other considerations include entrepreneurial, retirement and transfer of business relief.

Many businesses may also have investments or surplus assets that could be sold prior to the sale to maximise return. It is essential to identify these assets to determine whether or not they offer the best return sold separately or as part of the business deal as a whole.

How to negotiate a deal.

Once all the marketing material is prepared, and potential buyers are sought, it’s time to start formal proceedings to initiate the first round of applicable offers. Success from here onwards strongly depends on the management of the interactions with potential buyers. Deadlines should be clear and precise to help ramp up competitive tensions amongst avid buyers. The first round of offers will be a good starting point and will dictate what happens next, this may be the need for a second round of bidding, or it could lead to a sale from the onset. Often exclusivity is granted to allow buyers the chance to evaluate the property too.

Legal documents and requirements

Selling a business will involve a lot of legally binding contracts, it will include purchase agreements which detail the transaction and terms of sale for the buyer plus other things such as non-compete agreements or earn-out clauses etc. An experienced commercial law solicitor will be able to guide and help you in every step of the process from leading crucial sales negotiations to handling and taking care of all the documentation needed.