As 2023 draws to a close, a natural time for reflection is approaching – and many business owners may start giving serious thought to what the future holds for their company.
Many owners will have reached the point where they are considering the direction in which their business is headed. Some may choose to put themselves and their family first and enjoy the fruits of their hard work through the years.
Simon Daniels, Sales Director at KBS Corporate says “If you think the timing feels right to look beyond the responsibilities and pressure of running your own business, it is eminently achievable – with the right adviser alongside you – to complete an exit that fulfils all your personal objectives.”
The first thing anyone should do when they have decided to sell their business is to prepare as thoroughly as possible for what can be a complex process. KBS Corporate provided a 10-point guide to make sure every aspect of your company is in ideal shape to maximise value and deliver exactly the outcome you are looking for.
1. Know your goals
Before embarking on the practical tasks, take all the time you need to realise what you really want from the sale. Is it definitely time to step away from the business completely and put your feet up? Or would you prefer an investor to work in conjunction with and grow your company further?
Understanding your aims with total clarity from the outset will sharpen your focus to agree a deal that achieves your perfect end result.
2. Identify any potential dealbreakers
Another boundary to set at the earliest possible stage is any trigger for a red flag from your side during negotiations. Acquirers will inevitably have their own ideas about the structure of any deal they enter into – if you communicate from the get-go what would constitute a dealbreaker, a transparent and potentially smoother process is assured.
3. Make sure the timing is right
When you feel ready to make the big step of selling your business, or even if you are still weighing up whether to take the plunge, knowing the right time to test the water is particularly important.
Are the prevailing conditions in your sector conducive to putting your company on the market? Checking that temperature, and the current demand for businesses like yours, could be the key factor in knowing when to press the button.
4. Understand what your business is worth
A business valuation is influenced in several ways, from physical assets through to factors such as goodwill which are more difficult to quantify. Pitching at the right level is highly important – you want the blood, sweat and tears you have invested to be suitably rewarded, but should not price yourself out of the market.
5. Enhance the value of your business
Even if you have a figure in mind, there are still ways to increase the company’s attractiveness to acquirers – and potentially spark a bidding war. Minimise or pay off any debts, confirm all contractual and legislative requirements have been met, ensure the right staff are in the right roles and spruce up any premises ahead of visual inspections.
6. Get your finances in order
Clarifying the exact financial position of your business will ensure you are firmly on the right track for the scrutiny a buyer will undertake in the form of due diligence. Identify regular revenue streams and opportunities for growth, ideally by way of a professional report which illustrates financial projections over the next few years.
7. Decide the best marketing approach
Yours is unlikely to be the only business of its type on the market. What makes it stand out from the rest? Think through the unique selling points your company can offer, for example an exclusive service or product range or a continuous relationship with a prestigious customer or supplier.
8. Keep it on the downlow
It is critically important that a business sale remains confidential until the correct time arrives for it to be revealed. If the news was leaked, staff would worry about their futures, rival companies may try to poach them, customers could go elsewhere and suppliers may question whether their contracts would be honoured.
A Non-Disclosure Agreement signed by potential acquirers is the best way of ensuring complete discretion and protecting your company and its data.
9. Understand the tax situation
When selling a business, the biggest outlay can often be tax. If you sell your business for a profit, you will have to pay Capital Gains Tax (CGT) on any proceeds above your tax-free allowance – although this can be mitigated by applying for Business Asset Disposal Relief to reduce your tax burden if you have owned the business for two years.
Having the right tax adviser in your corner, with all the knowledge at hand to answer your questions and who can also conduct a full pre-sale review for you, is a huge advantage.
10. Choose the best business sales expert
Remember, you do not have to go it alone with a business sale. Expert guidance on everything we have covered above is readily available when you join forces with a leading adviser.
An experienced business sales specialist who has built up a trusted reputation over time will have the required knowledge and breadth of contacts to source a wide range of potential acquirers and maximise the value of your company.
KBS Corporate has been helping business owners for over 25 years with an award-winning service through every stage of the sale process – market-leading presentation of the opportunity, exceptional buyer identification and access to legal and tax experts, alongside an experienced transaction team which provides full project delivery.
