There are many reasons why you might be considering selling your company. Some reasons are personal, such as ill-health, not having enough time to devote to your business or being ready to retire. Other reasons can be connected to the business itself or the wider economy. Perhaps your firm is struggling and needs a new owner to bring fresh ideas and energy, or maybe the buyer’s market is ripe and it’s simply a good time to sell.
There’s no denying that selling a business can be a daunting prospect. After all, there are many issues to take into consideration, such as finding a suitable buyer, paying attention to the due diligence process and negotiating the right price.
How to sell my company
Don’t panic though; help is at hand. To ensure you reap the rewards of your hard work and see a return on your investment, we’ve put together this comprehensive guide to provide you with some helpful hints and tips for when you decide to sell up.
Get a professional advisor
Selling a company can be one of the biggest financial deals a business owner will do in their lifetime, so it’s essential to get it right. Of course, not everyone chooses to seek help. Some opt to go it alone instead. However, if you’re tempted to take this path, bear in mind that even if you’re experienced when it comes to running the day to day operations within your business, this doesn't necessarily mean that you will know how to sell your company successfully.
By hiring a professional advisor, you can increase the chances that you will get the best possible outcome. A knowledgeable and skilled specialist will help you to market your business through credible, forward-thinking business plans and documents that clearly spell out the benefits of acquisition. They’ll also coach you so that you know what to say and do when you meet buyers and they will reach out to as many potential acquirers as possible. In addition, an advisor will ensure effective communication between all sides and negotiate the most favourable deal. They will also help to manage the all-important due diligence process and get deals over possible points of contention.
Prepare your business for sale
Preparing your business for sale is crucial. The sooner you start making preparations, the better your chances of being able to sell quickly and for a good price. Getting your business ready for sale can include everything from ensuring your records are clear and in order, to making sure that your premises look the part, to having robust plans and projections in place. As mentioned previously, a professional advisor can help you with all aspects of getting your business ready for sale.
Know who to sell to
Whether you’re selling all or part of your company, finding the right buyer can be a challenging process that requires patience. If you’re attempting this alone, the best place to start is to make a list of all the different types of businesses that may be interested in buying. The most obvious buyers are often competitors, as they share similar products, services and customers, and they are already familiar with the industry. However, it’s also worth looking outside the most obvious buyers to find the best deals.
If you’re unsure about who to target when selling your business, your best port of call is to get help. Professional advisors will be able to scour the market on your behalf, opening up many more opportunities than if you were to look yourself. They will also help you to filter down your options and can even create a competitive bidding process between multiple buyers, which could increase the value of your business.
Finding the right potential acquirers is vital if you’re to achieve your objectives, so it’s something you should take very seriously.
Complete the due diligence process
When you’ve found a suitable buyer, the due diligence process will take place. This is when the potential buyer does a comprehensive examination of the business that’s for sale. The due diligence process normally happens when both parties have agreed to a price and before a letter of intent is signed. Depending on the complexity of the business, this could last for a few months or longer. The process can involve a physical examination of your company’s assets, including your premises and inventory, as well as an inspection of your documents, such as financial paperwork, tax records, employee contracts and licenses.
Remember that you will need to be ready to provide relevant information and paperwork when requested, including financial accounts. At this stage, it’s also a good idea to prepare any legal paperwork needed to complete the deal. Before due diligence begins, make sure all documents are up to date and your premises are in a good state. Being cooperative can mean that the deal goes through quicker, while in contrast any delays could result in the prospective buyer pulling out.
It’s also worth having a confidentiality/non disclosure agreement with a potential buyer. This will ensure that any sensitive data or confidential information about your business is safeguarded if the deal falls through.
When is the best time to sell?
If you’re wondering how to sell your business quickly at the highest price, there are many things you need to take into account. It can be difficult to pinpoint the right time to put your company on the market, especially if you lack knowledge and experience in this area. The question of when to sell your business depends on a number of factors, such as your profits, the marketplace and your own personal circumstances.
It’s important to be aware that there are certain times when you should avoid selling if possible. For example, a bad time to put your business on the market would be when there are problems among shareholders or tension among employees and managers. Prospective buyers can easily pick up on these issues and, as a result, view your company as less valuable. Conversely, a good time to sell may be when your business is growing, has good reinvestment, plenty of new and innovative products or services, and good employee retention. All of these things can add value to your company.
How to get the best price
When deciding how much a company is worth, many business owners make the mistake of guessing or using a business valuation calculator. The fact is, business values are highly subjective and much depends on the level of competition out there. This means that to get the best price for your company, it’s worth making an effort to create competition between multiple buyers. The value of your organisation can increase markedly as a result of this.
While you should have a clear idea of what you want from the deal, you may also need to have some flexibility. Deal terms and structures are a complex area - and the ‘headline price’ may include a combination of cash on completion, and some deferred consideration, payable at a later date. Again, professional advice can be crucial here.
Closing the deal
When the due diligence process has come to an end, it’s time to finalise the sale agreement. This is when you state the specific sale terms and any future liabilities or warranties. Having professional advisors can be crucial when finalising the paperwork and closing the deal with the buyer - even if you have not had any assistance before now.
You may find that the buyer tries to re-negotiate a lower price after finding something during the due diligence process that they believe does not reflect the information you provided. Whether this suggested change of terms is justifiable or not, having advisors on hand can be essential during negotiations like this. These experts will help you to reach a favourable agreement as quickly as possible.
Once the final price has been agreed by both the buyer and the seller, the contract of sale is signed and the deal is done.
How we can help
The question of “how to sell my business” is one that many business owners and shareholders ask themselves - and we’re here to offer our professional assistance and provide answers. As a leading mergers and acquisitions company with over 25 years of experience, BCMS is well placed to help you get to grips with the sales process and achieve the best outcome.
If you require further advice or have any questions about how to sell your business in the UK, don’t hesitate to get in touch today. Our experienced and dedicated team can answer any queries you may have about how to sell your business, when the best time to sell is and how to ensure that you get the highest possible price.