Up to 50% of private business sales fall through before reaching completion. There are many reasons for this but it is clear far too many business owners try to sell when they are not fully prepared…
Pre-Sale Planning – Issues to be considered
Motive for selling; is it the right time?, when is?, have you brought the business as far as you can? Consider life changes. Are all shareholders in the same place as you?
Products and Services; Where are the products in the life/development/market cycle? What changes or improvements should be considered to make the products more attractive to a buyer of the business? Introduce new products? , complete work in progress, wait for new developments, product presentation and packaging
Customers and Markets; What is the impact on customers if business sold, nature, term of existing contracts and improvement to same , service contracts implementation , recurring revenue ? Market maturity, program and campaigns to increase market share
Financial Conditions; Are financial conditions suitable or what to do to make them suitable. Can you increase revenue and profits? , e.g. what sales initiatives and cost cutting measures can be implemented in advance. Strength of balance sheet and cash position all will impact on value.
Assets/Contracts; Transferability, control clauses in supply agreements, property assets to be retained. Environmental issues
Pension Schemes; is there defined benefit scheme funding issues, contingent liabilities. Defined contribution, are contributions maximised?
Management Team; what changes to management can you make to satisfy a future buyer. What is your position? , are you staying? Should you appoint a new MD / Team well in advance of sale to reduce dependence on you? Where do other members of management team stand? How do you bring them along? Are they a potential acquirer or threat?
Business Image; What can you do to strengthen valuable brands , trademarks, websites , online presence, location , premises , networks , membership of associations
Legal Structure; Changes required to legal structure? Assets ownership, subsidiaries, group structure etc.
Taxation; what are the potential tax liabilities on the sale of business. What restructuring can be put in place to minimize tax?
Determine Likely Purchasers; MBO/ Family/Strategic purchaser/Private equity/Competitor
Corporate Finance Advisor; Appoint experienced advisorCorporate governance; Clean audit report, tax compliance etc.