You’re thinking about moving on to the next challenge, and selling what you’ve created – but how do you get the best value for everything you’ve built?
Selling a business can be a wrench – it’s your baby after all. But if you are going to sell it, you want to sell it ‘well’. Obviously an important concern is the money, but it is also about looking after your team and your customers as the business morphs from being in your control to being in the hands of the new owner: just like the teenager leaving home, becoming independent whilst you still want to protect them.
What things do you need to consider as you prepare yourself to sell your business?
- Once you’ve sold your business what are you going to do next? My first point might feel counterintuitive … but bear with me. Are you going to retire properly, start a new venture, buy a yacht and sail around the world, become a philanthropist, become an angel investor? The point here is that once you know what is next, you can work out how much money you need to do that … and, therefore, the minimum amount that you need your business sale to achieve. There might also be things that you do beforehand to prepare the ground for what comes next.
- The sale price you want to achieve might be quite different from what your business is currently worth! Identify if a gap exists and, if so, what you can do to resolve this. Quite often in the run up to a sale you can do things to your business that enhance its value. If you are working towards a business sale, then three years beforehand isn’t too soon to start thinking about this! In fact, the best advice is to operate your business as if you are permanently readying it to sell to someone else – on the grounds that if it is good enough for someone to buy, then it is also good enough for you to keep.
- Of course the next question is ‘how to enhance the value of your business’? Every business is different and so the details will vary for each one, but there are some general points that apply to all businesses:
- Businesses with a middle management team are more sellable than ones without.
- Businesses with a reliance on a top customer, top supplier or top employee are less attractive to buyers.
- Businesses with systems and processes are more attractive to buyers.
- Businesses with higher profit margins are more attractive.
You may well have noticed that those things that make a business more attractive are fairly obvious. You can probably review your business and self-audit it to work out the areas that you need to work on. But, like a lot of things in business, it is rarely as simple as it looks. This is where a business adviser can make a positive difference. Firstly, by helping you to see your business as others view it, thereby identifying the areas which need work. More usefully, a good business adviser will then be able to support you in finding solutions to your business challenges, making it more attractive and achieving a higher price for you.
If you would like our help in reviewing your business, then please ping me an email ([email protected]) or click this link www.calendly.com/jonathan-jvca and book a slot in my diary to discuss your situation!
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