Seller FAQ Business Sellers will probably only sell a couple of businesses in their career - it's unfamiliar territory. The key areas are covered in:   Seller FAQ

Preparing a Business for Sale

Sure it’s all been said before … but … the best time to start preparing a business for sale is when it’s first conceived.  And if you’d followed all the sensible business advice dished out over the years you wouldn’t have the successful business you do today right?

 

If you think that one day you will have to move on from your business consider the following:

 

• Timing is critical – the best time to sell is when everything is going north – sales are increasing, profits are rising and the business is doing well in a growing market

 

• What is the impact of the owner’s departure from the business?  If the owner can’t go away on holidays for a month without the whole show ending up in a mess there’s not much to sell

 

• Systemisation and documentation mitigate the risk of reliance on a founder or key employee

 

• Shareholder and partnership agreements need to be sorted out in the cold hard light of day; not in the mire of a dispute.  Selling a business when the parties are at war rarely makes for a good outcome for the seller

 

• Get professional advice on tax structures early; some conditions need to be in place for a considerable time before becoming advantageous

 

• Think about what you have to sell and how to demonstrate its sustainability.  You can touch machinery.  An established relationship with customers is harder to demonstrate.  Contracts and long serving staff in the sales department give the business some substance.

 

• Separate the property from the business and ensure a commercially realistic rent is accounted for

 

• Check for reliance on a key supplier, customer or staff member

 

• Be able to very clearly articulate the competitive advantage

 

• Clean out the stock on hand

 

• Document and protect Intellectual Property

 

• Get the house in order – tax returns up to date and ‘clean’, contracts current and signed, employee and contractor records faultless and procedure manuals dust-free.    All of these and much more will be reviewed at Due Diligence

 

• Think seriously about a vendor due diligence – could you survive a shake-out by a prospective purchaser?

 

 

 

 

This is the “Rough Guide to Preparing a Business for Sale”, so if you’d like professional advice on preparing your business to be sold contact the professional business broking and ‘transition-of-ownership’ consulting firm Trio Business Intermediaries.