You should approach the sale of your business with the same due care, attention, and planning which you employed when you set it up, established it and grew it.
Sell Your Business Today:
How To Prepare Your Business For Sale
You should approach the sale of your business with the same due care, attention, and planning which you employed when you set it up, established it and grew it. Selling your business is a mixture of the business and the personal – this is a financial transaction which will fundamentally alter your personal life and professional responsibilities for years to come.
You will, almost in all cases, be subject to restrictive covenants meaning that you won’t be able to trade in the sector you built a business in for a significant period of time – prepare for up to 10 years.
You need to be clear on what comes after, how much it’s going to cost, and whether the money you can realistically expect to receive from the sale of your company will be enough to pay for the next stage of your life. Therefore, your first step must be to get a professional valuation of your business before anything else.
Get A Professional Valuation
If you want to sell your business and the M&A advisor giving you his or her valuation is of the belief that the money you receive from the process will not be enough so that you never to have to work again, you need to be clear about what you’ll do with your life and how you’ll meet your ongoing financial responsibilities post-sale. Ideally, you’ll need to start building what will become your primary source of income now as a second income for while you still own the company you intend to sell.
If you want to sell your business and your valuer believes that the amount of money you receive for it means that you’ll never have to work again, you need to know what you want to do with your life when you’re no longer the owner of the company. 40-60 hours a week is a lot of time to fill and, by their very nature, most entrepreneurs want to be active and involved in something. Now you know what you’re likely to receive in payment and whether now is the right time for you to sell, you need to get your business ready to present to the market.
The acquirer is also driven by three further motivations
If you decide that now is the right time to go to market, you should inform your accountant and your solicitor of your intentions so that you can form your own team of professional advisors – you’ll need them to battle on your behalf with what’s to come.
Following your selection of an M&A advisor, they will advise you to start getting your company documentation in order prior to marketing to business to prospective buyers. While you’re doing that, they begin the preparation of the marketing materials about your business including the initial introduction/teaser advertisements and the significantly important information memorandum.
In previous decades, the solicitors and accountants representing the seller of business would prepare the documentation needed for a “data room”. This was an access-controlled room which contained all the information likely to be required by the solicitors and accountants representing the purchaser. Fast forward to today and most “data rooms” are now virtually and only accessible via a multi-factor authentication system.
In order to prepare yourself for the due diligence process, it’s better to make sure that all of your paperwork and documentation is in order and up to date and that you continue to update it on a weekly or monthly basis.
Transparency and quickness of response during the due diligence process are essential. If a feeling develops in the acquirer or their professional representatives that obtaining information is difficult from you for whatever reason, the likelihood of a deal on which you have shaken hands falling through greatly increases.
Prepare Your Business Now
How to go about preparing your business
When preparing your business for sale there are many factors you must take into account to make sure the process is as efficient and streamlined as possible. See below for things you must take into account:
While the weekly or monthly updating of your data room documentation will require you to put in extra time at work, never lose sight that you must make sure that your business continues to be well-run, efficient, and profitable.
Any dip in sales, profitability, or efficiency as a result of your being distracted by the process will often lead to the acquirer reducing their offer price.
You will be asked for regular financial updates and management accounts during the entire process and presenting weaker figures to your acquirer will be noticed.
Get Your Business Ready With IBA Corporate
Are you ready to start the process? We’d really appreciate the opportunity to speak with you about the sale of your company and being part of the process.
Please get in touch with us to find out more.
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