Exiting a business can be just as tricky as starting one. If you are wanting to sell your business, then there are a number of outcomes that you may be looking for, and getting a good price is probably on the top of the list. If you want to achieve the best possible price we recommend the following.
1. Preparation
Getting a business ready for sale takes time. The more work you put into preparing the business for sale the better price you will achieve. For example, there may be changes needed to business systems, or you may need to upgrade equipment in order to make the business more appealing for purchase. Your Accountant / M&A Advisor can help you make decisions around what will improve the value of the business and where your time, effort and resources should be spent in preparing the business for sale.
2. Build your succession team
Business owners contemplating exiting their business need to put in place adequate Succession plans in order to achieve their financial objectives. Succession plans may involve selling to a third party, internal succession, merging with another business or listing on a stock exchange. However, no matter what type of succession, in order to achieve a great result it is essential you don’t leave decision making and preparation to the last minute.
Build a team of knowledgeable allies to help you build your exit strategy. These might include your accountant, lawyer, real estate agent if you own property in the business or even other business owners who have sold businesses in the past. You need to have a smart team of people working to assist you in making the right decisions.
Related: Why your Business needs a Succession Plan
3. Make the business appealing
You need to make sure that the business is appealing to a prospective buyer. This means making it affordable. If it is a larger business you may need to break it up so buyers can afford it. For example you might break apart the operations of the business from the assets and equipment. You might even retain ownership of the assets and lease them to the operations business.
There are lots of options other than just selling the whole business to one buyer. Be open to suggestions and ideas as it may be more financially lucrative for you in the long run to do things a bit differently in the short term.
4. Transition is key
Think about how the business will survive during a ownership transition. Will your key staff stay on board and help? Will you need to train the new owners? You may need to include as part of the sale that you will remain for a period of time to assist with the handover or to perform training for them. This may make the purchase more appealing for the new owners and reduce some of their perceived risk.
If the business in part was about you or your personality then you may need to demonstrate that it can stand alone without you there. Perhaps you can do things now, prior to putting the business up for sale to remove yourself from the business image and ensure that the business doesn’t rely on you as much as it might have.
If you are looking at exiting your business, or you want to start putting a plan in place for an exit then make sure you talk to your Accountant / M&A Advisor. We can help you put together an exit strategy even if you aren’t looking at executing straight away but want to be aware of your best options.
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