Selling your business is a big decision to make. The chances are this is your first and probably your final business sale, so it is imperative to get it right.
Having everything prepared before you take the business to market, helps to present your business in the best possible light. You always want to put your best foot forward, and hence why we have put together this guide to assist you.
1 – Having your accounts in order
When you sell your business, most purchasers require at least three years worth of accounts. You will need to have these ready from the start, and have an understanding of how they look to the buyer.
When selling a business, there are usually ‘add-backs’ which will come into play and are typically calculated by your selling agent. The add-backs will affect the Adjusted Net Profit figure, which should be a realistic representation of how much the purchaser would earn from owning and operating the business.
2 – Have your paperwork ready
When selling a business, naturally paperwork is required. Below is a list of all things you may need to have in ready:
- Annual accounts (minimum three years)
- Last annual return
- Copy of any agreements
- Copy of hire purchase or leasing agreements
- Details of business rates
- Property lease agreements
- Insurance policies
- A copy of any commercial agreements
- List of all employees
- Employment contracts
3 – Be clear in your reason for selling the business
There isn’t a sale that proceeds without the potential purchasers asking that question “why are you selling your business?”.
You significantly better being honest with purchasers, and explain the real reason for selling. If you are selling because the business isn’t performing how you’d like it to, that’s fine, tell them.
4 – Be resilient
Selling a business can take time, depending on several factors. Some sellers can sometimes be discouraged if the business hasn’t sold in some weeks. Selling a business is more of a marathon than a sprint, as you want to find the right buyer who ticks all of the boxes for you as an exiting owner.
Also, don’t take your foot off the gas. Owners sometimes feel as though a sale could be imminent and decide to start slacking in the business and see its performance dipping. It can be a red flag for a potential purchaser and could lead to them driving down the price they are willing to pay.
When you are ready to sell and have your house in order, call a business transfer agent like EM&F for a free business market appraisal, which will reveal how much you are likely to get from selling the business.
