Selling a Business Checklist

When it comes to selling a business, preparation is key to experiencing a trouble-free transaction. There are a multitude of factors and moving parts that need to be considered before your company is even listed for sale, and a specialist business sales service will help sellers to navigate all of these, usually securing a better price overall in the process.

While using a professional selling service takes care of a lot of the issues you’ll face when selling your company, there are still plenty of tasks you’ll need to check off before you can achieve the best price your business can attract.

 

 

1. What’s your reason for selling your business?

This first step is simultaneously the simplest and most important question you’ll need to answer before you sell your business.

Once the sales process gets started, it’s easy to be swept in a particular direction, even if it’s not necessarily what you had originally envisaged. There’s a plethora of different reasons that business owners decide to sell up, and the objective of each sale will differ between each.

Retirees may want to secure the future of the business and reputation they’ve spent so long to build up by selling to somebody who shares their values, rather than just the highest bidder. Directors looking to pay off debts, meanwhile, may opt for a quick sale instead of holding out for the biggest price too.

Take a moment to consider what aspect of any potential sale is most important for you, and try to remember this throughout the process. This will give you a much better chance of eventually securing the right deal for you.

 

2. Get advice on selling a business

This step could be added at any point in the sales process, but it should be of little surprise that the best time to get in touch is right at the start.

A good business sales team will be able to guide you all the way through the process, and help you to prepare your company in such a way to meet your sales objectives. Usually, these services charge a small percentage of the end sale fee, so you can rest assured that they are as committed as you to achieve the very best price from your sale.

Selling through a professional business sales service often achieves much better prices for directors, but it’s the sheer simplicity of the process that is frequently the driver for appointing such services. Selling a business can be incredibly stressful and time intensive, but a good business sales service can make the whole process a lot easier by shouldering many of the tasks involved.

It’s worth taking your time to ensure that you appoint a trusted and experienced team to handle your business sale. Forbes Burton are proud of the five-star TrustPilot rating they’ve accrued over many years of helping clients, and review sites such as this are a good place to research any business sales companies you consider.

 

 

3. Consider which deal structure is right for you

While everybody prefers to be paid in one lump sum, it’s not uncommon to receive bids from buyers that want to pay in instalments or by other alternative means.

If there are question marks around a particular risk attached to your business, a buyer may opt for an earn out payment instead. This method sees the final price decided by how the company performs under the new owner. This could be a good option for sellers of businesses that don’t reflect their true worth on paper.

Both payment methods leave the seller exposed to an element of risk, but if no other bids are forthcoming, a good business sales team will be able to mitigate the risks involved by negotiating on your behalf and trying to secure a larger payment upfront.

 

4. Are you just selling a portion of your business?

Another element of the deal structure concerns what part of your business you’re actually selling. A share sale will see you relinquish control of the whole company and sell your business as a going concern. A goodwill, assets, and stock sale, however, allows sellers to pick and choose which elements they wish to sell. Several different assets can be sold of to separate buyers, making it possible to maximise the amount received for each. This method can however accrue more tax obligations.

 

5. Demonstrate how your business can grow

If you’re able to share plans that show the potential for growth in your company, you can attract more interest and a better price. Any previous research you may have conducted can be valuable here. Compile any quotations, plans or anything else you have to give buyers a better idea of how your business can grow.

 

6. Settle any disputes

They last thing that buyers want to inherit is a longstanding issue that they have little information about. Potential bidders are looking for a problem-free purchase, so any ongoing disputes with employees, suppliers, or any other third party will have the instant effect of putting off many suitors.

This may be the time to swallow your pride with outstanding disputes. Paying to resolve smaller issues is often far more economic than attracting lower bids based on any uncertainty a buyer may have with ongoing disputes your business is involved with.

 

7. Increase profitability

Though this may sound like something that should have been done already, you’ll likely find that there are several things you can do to increase your company’s day-to-day profits.

One of the easiest ways to make your business more profitable is to reduce its expenses. Many of us are guilty of adding little comforts to the running of our businesses, but if you’re looking to sell, these can often be scaled back. Services such as office fruit deliveries are obvious candidates for cancelling, while any software subscriptions that makes your own work a little easier, may be worth cancelling while you look for a buyer too.

It’s important to look over your outgoings to ensure that you don’t have any personal expenses mixed in with those belonging to the business as well.

 

8. Make repairs

Buyers looking at your business will see any outstanding repairs or worn furnishings as potential future headaches for them, and may try to haggle a sale price down to reflect this. It’s often better to make any repairs to equipment or premises before selling to make your business more attractive.

As superficial as it may seem, a fresh lick of paint and a new carpet can make all the difference to your sales prospects. A tidy workplace subconsciously portrays an organised business to buyers, whereas a messy building can prompt interested parties to wonder what other elements of the business may have been neglected.

 

9. Valuing a business

It’s strongly advised to consult a professional about valuing your business. There can be several things to consider to come to a price that truly reflects your company’s worth. All of the following points can come into the equation:

• Debts
• Assets
• Historical, current, and projected financial performance
• Current balance sheet
• Potential for growth
• Value of existing contracts
• How easily it may integrate with the buyer’s existing business
• Quality of key staff already in place
• Market share of industry (locally or online)

Take a look at our online valuation calculator to find out what your business is worth.

 

10. Tax on selling a business

Another good reason to enlist the help of a professional business sales team.

There are multiple tax obligations that can be triggered in the process of selling a business, especially if you decide to sell certain assets separately. It’s important that you know the amount of tax that you’ll be expected to pay, so that you can gauge what you’ll be left with after any sale. With enough tax permutations to warrant a post of its own, this is certainly one aspect of the sales process you’ll appreciate the help of a specialist in.

In general though, most businesses will need to pay Capital Gains Tax as well as Corporation Tax. There are tax relief measures that some may be eligible for, however. These include Business Asset Disposal Relief, Business Asset Rollover Relief, and Incorporation Relief.

 

11. Look at existing contracts and leases

In a share sale, any existing contracts or leases are taken on by the purchaser. This means that the agreements you have in place have the potential to be a positive or negative aspect in the eyes of interested parties.

If you have a particularly good deal with a supplier in place, or low rental payments, you can use these as a marketable benefit when selling a business. If they’re due for renewal soon, make sure that you secure the same rates again early, even if you think you may have exited the business by the time your current contract runs out.

On the flipside, if your existing contracts are poor, it may be worth trying to renegotiate or switch suppliers. While a new owner may want to choose their own suppliers eventually, it’s almost always appreciated to have everything in place from day one to carry on trading as normal.

 

12. Make sure your finances are in order

This should go without saying, but anything other than a transparent and well-ordered financial record will see buyers quickly look elsewhere. Purchasing a business involves an element of risk for all buyers, and impenetrable accounts will at best, slow down proceedings, and at worst, arouse suspicions that the business has been run dishonestly.

No buyer wants to acquire a company with their eyes closed, so ensure that all of your accounts are clear and accessible. If you have any expenses that you think an outsider to the business may question, create a list to pass on with explanations behind each. Potential purchasers will feel assured by your diligence and transparency.

 

13. Consider any intellectual property

If your business owns any copyrights, trademarks or other IPs, you should ensure that these are at the forefront of your sales proposition. If you have the opportunity to secure these for territories outside of the UK too, it may be worth considering as it can open up your market of buyers considerably.

 

14. Create sales brochure/literature

Once you have your company in saleable shape, it’s time to start listing all of its great points in some sales literature. Your business sales team may take care of this for you, but if not, it’s a simple enough task to put together some of the main selling points your company has to offer.

The amount of information included will depend on whether this is intended for introducing buyers to your business, or for offering additional information to those that have already expressed an interest.

 

15. Approach potential buyers that you may know

Some sellers may already have an idea of the people they’d like to sell to. These may be family, friends, or local businesspeople that they might know.

If one of your main selling objectives is to secure the highest fee for your business as possible, this approach rarely pays off. If your buyer senses that you’ve only offered up your business to a handful of people, they may use this lack of competition to haggle the price down. Friendships can also be lost at the negotiating table, so think carefully about who you approach with your offer.

 

 

16. Practice confidentiality when selling a business

Using a business sales team’s contacts and marketing techniques to sell your business is much more likely to attract a higher calibre of bidder. Some business owners may worry, however, about their staff, or other parties finding out that the business has been put up for sale.

A professional business sales team will recognise this concern, and include processes that uphold confidentiality throughout. You’ll notice this in sales literature that withholds identifying features, and contracts that feature restrictive covenants and non-disclosure agreements.

Make sure that you only mention your business sale to those who must know. If word spreads, you may find that employees can become worried, customers might decide to stay away, and competitors may use the information to their advantage.

 

17. Getting the timing right

Take time to consider when it might be best to sell your business. Your company will be most attractive to buyers either directly after a sales spike to show its profitability, or before an expected busy period. This is especially true of seasonal businesses that experience a boom in summer or at Christmas time.

 

18. Employees

Ideally, your workforce should notice little change during the process of the business sale. With this in mind, its best not to mention anything until a deal has been set in stone and is almost certain to go through. If your business is being sold as part of a goodwill, assets, and stocks sale, you may need to let staff know earlier, as there might not be an operating business left over after everything has been sold.

Even if you opt for a share sale, staff will still need to be informed, so TUPE (transfer of undertakings and protection of employment) obligations are met, and adhered to as the deal goes through.

 

Need guidance selling a business?

We’ve helped countless business owners to assess their options when they’ve decided to sell up. Call for free, no-obligation advice from one of our friendly specialists, and you’ll get all the guidance you need for the best route to take for your particular business.

As specialists in business sales, we can help you to discover the best possible buyer. Call us on 0800 975 0380, or email [email protected] for a free consultation.