A significant part of business is buying and selling in the M&A market, and there are various things to consider when you sell a business – especially if this is a larger corporation.
From assessing finances through to informing and communicating your plans with staff and stakeholders, we will explore all considerations when selling a business and offer advice to those looking to sell a corporate organisation, including tips from business financial experts, Hilton Smythe.
Business Information
The first step that a business consultant would look to undertake, and the first thing for a business to consider, is the collecting and dissecting of business information.
Lots of planning goes into the day to day running of your business, and this is the case when it comes to selling the business too. It is important to make the business as appealing as possible to a prospective buyer.
This can include bringing any accounts up to date and settling any outstanding disputes. Ensuring that any key customers, suppliers and staff are tied in is also critical – it is vital to bring together and finalise all paperwork so that everything is as organised as possible. The more organised you look as a seller, the more credible your business will present itself to potential buyers.
Jacob Lord, Senior Deal Executive at business exit specialist Hilton Smythe, says of this stage of the sales process: “With this type of business sale, the relationship with the client would generally be more extensive than with a commercial sale. Time would be spent up front with the client, ensuring they are setting up to have the best chance of a successful business sale. This consultation process helps both Hilton Smythe and the client develop a successful relationship and process”.
Time spent on this stage can help make the business more appealing to buyers, and should be establishing:
- Is the business stable?
- What are the USPs?
- Is there a clear pathway and potential for growth?
This stage is also the time to bring together all accounts, as well as look at the reasons for sale. Has there been an exit plan in place, and is there a clear plan for succession? A business consultant would look to gather all of this, as well as offer advice at this stage of the sale.
When is the best time to sell?
Sellers may have questions around the length of time it can take to sell a business, and when the best time to sell a business is.
Lord says: “There is no such thing as a ‘bad time’ to sell a business, providing of course the valuation is accurate and everything is in place to make it an appealing sale. Concentrate more on the state of the business and its saleability, rather than the market. Most deals can take between 6-12 months to happen, and from the deal agreement to completion should take around 12 weeks.”
How much is the business worth?
At this point, the reasons for the sale of the business will have been established, and all of the relevant information will have been gathered and analysed, with the aim of making the business as saleable and appealing as possible.
Having collated all of the necessary information, an accurate business valuation will be possible.
Utilising the services of a professional is important to get the valuation right. Of course, a vague estimate will be possible, but a professional consultancy process will enable you to get an accurate valuation and potentially set up the successful sale of your business for maximum value.
Taking the Business to Market
Once a valuation has been carried out that you are happy with, and of course is an accurate representation, it is time to progress the sale by taking it to market and attracting potential buyers.
As with the running of a business, marketing of the business for sale can make a huge difference and will require some significant time and effort. Making the business appealing is of course important for the sale, and marketing materials, brochures and teasers can be incredibly useful.
“At this point of the sale, Hilton Smythe will assist with various aspects of the process and work closely with the business owners. Due diligence needs to be carried out on potential buyers, to make sure they meet the financial requirements necessary to purchase the business.
In addition, after completing desk research and identifying buyers, we work closely with the client to match buyers to the business. It is very important to make sure the organisation, and the potential buyer are a good fit, to result in a successful sale and business future.”
Additional factors to consider during the sale process include the communication of the sale to the workforce, and any existing stakeholders. Communication throughout is critical, and staff need to be aware of the process and the situation they are in at some point. This can be a difficult topic to approach and we are on hand to advise, as each business will be different in this respect.
The performance of the business in the run up to and during the sale period will usually be dependent on the workforce, so be sure to always communicate as soon as possible. Not only do staff need to continue to be motivated and happy at work, but they may also feel uneasy at times of business sale repositioning the importance of how this topic is approached with them.
By considering all of the aspects in this guide, and utilising the availability of industry experts, you stand a good chance of progressing with a business sale timely and whilst maximising value. Be sure the circumstances are right for everyone, and you are prepared for the sale, as well as being aware that it can be difficult to guarantee a time frame for the sale itself.
