Plan for selling
The beginning of the New Year is a time for resolutions, plans and changes. It’s no surprise that for business owners, this can lead them to consider potential exit options, with a full business sale often one of those considerations.
If you’re thinking about selling your business in 2017 here are a few things you should do first.
Find out how much your business is worth
For many business owners, the sale price of their business is an important number. For some business owners, it represents capital for a new venture. For others, it provides a useful boost to their retirement savings.
Finding out what your business is worth before heading to the market enables business owners to make an educated decision about whether their sale will likely provide them with the requisite funds to meet their individual needs post-sale. This is a far better outcome than committing to a full divestment campaign, only to find out down the track that your business’ true value is not in line with your expectations or needs.
Market-savvy business valuers can also provide you with valuable advice when preparing your business for the market which may assist you in boosting your business’ sale price. It is for these reasons that a business valuation is one of the best investments when making your decision of whether to sell or not.
You’ve invested blood, sweat and tears into your business over a long period of time. When it’s time to sell, don’t let all of that go to waste as a result of a rushed sales process.
Careful preparation may involve making small adjustments to the operation of your business. For example, you may consider reducing your stock holdings should your inventory levels be too high. Or perhaps, you may work with senior management to ensure that they have all of the requisite skills to run the business without your day-to-day input. These steps will ensure your business is well prepared for the rigours of external examination that are part and parcel of a sales process.
The sale process that you follow should also be carefully planned. Consider which potential strategic buyers you should approach and how best to manage confidentiality with each individual party. Organise your documents and records so you are well prepared for buyer Due Diligence. Doing these tasks and others prior to heading to the market will put you in the driver’s seat and maximise the control that you have over the sales process.
Speak to Your Advisors
Speak to your accountant, lawyer and financial planner. Also, engage the services of a business sales expert early on in your considerations.
With their combined expertise, your Advisors will help you achieve the best outcome possible in the sale of your business, and equip you to achieve personal and professional success post-sale. Below are just a few things you should speak to your Advisors about:
- Tax consequences of your sale: How will the sale of your business effect your tax position both now, at the time of the transaction and beyond. Effective tax advice will ensure you maximise your after-sale proceeds from a divestment which means more money in your pocket.
- How to invest the proceeds of your sale: Speak with your accountant and financial planner about the best way to invest your sale proceeds. This will vary immensely pending your own personal goals and stage of life. Having a plan in mind prior to proceeding to the market can help you determine if the likely sale price of your business is in line with your individual needs.
- How to maximise your sale price, and manage the transactional process: Speak with your M&A Advisor or business sales specialist about the best way to manage your sale. A good Advisor will ensure you receive the best possible price, and secure optimum transaction terms as part of your sale.
- How to manage legal risks and contractual agreements: Speak to a commercially savvy and experienced lawyer about the steps that should be taken to manage your exposure to risks and to assist with drafting all required contracts.
Plan for your next phase of life
Make a plan for what you will do post-transaction. Is a holiday in order? Some new commercial ventures? Maybe retirement is your plan?
Having a clear vision as to what your life will look like post-transaction will give you purpose following the sale of your business, and can greatly assist in putting things in perspective during the completion of your sale.
The sale of your business can be stressful and time consuming. It’s important to have a ‘light at the end of the tunnel’ to help you keep focused on your reason for going through the process.
Congratulations – you’ve made a commitment to do your best to complete the sale of your business in 2017. It will be hard work, but I’m sure the rewards will be worth it!