Selling Your Own Business
‘Should I stay or should I go now…..’ as ‘The Clash’ say in their song is often the decision that business owners have to make when it comes to deciding whether or not to sell their business, but really the questions are;
- How much is the business worth?
- Who will buy it?
- And, importantly, can I trust those who are looking/ interested in buying?
The first thing to consider, is that it is important to PLAN TO SELL, we all appreciate that at times life throws in a curve ball, but a plan needs to be in place!
There are a number of aspects to consider when planning to sell, which will differ according to the type of company you are operating, but some areas to consider to make your company stand out would be:
- A good company structure.
- Processes to maximise success, such as sales, customers, brand, profits and cash flow.
- The price you want to achieve
- When you are planning to sell.
Once all this is considered, then you can start to work on how you will create a company plan that is attractive to buyers, and a business plan to support this for the coming months and potentially years!
BUT something else to also consider when the time comes to sell the company, is the buyer!
Many horror stories have come to light and ‘getting this wrong’ will potentially ruin all the hard work you have put in – and nobody would want that…so be careful of some of these pitfalls:
Game players – these people will negotiate an excellent price with you and let you start making plans, then the discussions will start to drag, holes will be picked, concessions will start to be brought in and the relationship will start to go sour, and one of you will end up pulling out!.
Payment Plans – in other words they want to buy the business with a number of installments, based on something quite complex which may include profits or exchanging your business for shares in a company they already own. You need to be very careful here.
The time wasters – these people will sign your NDA, and you will hand over all your accounts for them to review and they will do a great job convincing you they are genuinely interested – BUT they are often just after information, maybe they are looking to start their own business or they have a business similar to yours and want some ideas as to where you are getting it right! Often they disappear after a couple of meetings.
These people are a pain and they use up your precious time – but they also mean that you could miss out on some great opportunities with genuine people.
So the art of this is to have some questions of your own ready, so you can sort the ‘real’ buyers from the fakes!
Some simple suggestions may be;
- Tell me about your own business experience? (Take a look at them on Social media)
- What companies do you own / have you owned and what is the status now? (This can be easily checked to ensure its true!)
- Ask about the sectors they have worked in?
- Establish if the buyer has chosen your industry at random or has chosen it for a reason?
- How long have they been buying businesses or thinking of buying one?
These are purely suggestions and there are many more that could be added to the list, but use your gut instincts – remember you have worked hard to nurture and build this business and your years of blood sweat and tears should be rewarded with a fair price and deal, within a reasonable timescale.
If you would like any assistance with business planning or a valuation for your business – we would be happy to help at RIFT Accounting, just give us a call http://riftaccounting.com