It’s never too early to make a plan
You have worked hard and will have shed blood, sweat and a lot of tears building your business. However, the point will eventually arrive when you decide that it is time to sell.
This will preferably be at the end of a well-prepared planning process, ensuring that the business is in the best possible shape for sale. However, this may not always be possible, particularly when an approach is made out of the blue or when personal circumstances change. It is essential therefore to start preparing for a sale even when a sale is not in the immediacy.
It is possible to undertake some key checks and take the necessary actions before a sale process is even started. Simple matters such as ensuring all key information regarding the business is readily available and is up to date, this includes financial, legal and commercial information. Ensuring there are no unforeseen issues that due diligence will highlight is very important if vendors want to avoid having to provide extensive indemnities or even suffer price reductions.
Having started to plan for a sale, it is worthwhile considering the options available regarding potential acquirers. A trade sale is often the chosen route as this will invariably achieve the highest level of consideration. This can either originate from a direct approach by a third party or can be part of a disposal process where potential acquirers are found through a search process.
However, an alternative exit option is through a Management Buy Out (MBO). This is only achievable where a management team already exist in the business with the skill set and the appetite for an MBO. As part of their exit planning, business owners often put in place the right management team to undertake an MBO, as this not only provides an alternative to a trade sale, but a strong management team is a key requirement for many third-party acquirers.
Achieving the best price is great, being able to sleep at night is priceless.
Whatever the chosen exit route it is essential that business owners obtain the right professional advice as early as possible and ideally prior to the sale process commencing. This includes support from corporate finance advisers, together with tax and legal advice.
Deciding that it is time to sell your business can be the start of a new chapter for you and your family, providing financial security and more free time. Where possible, formulating a plan towards an eventual sale should help you both achieve the best result in terms of a deal also reducing the level of stress involved. After all, achieving the best price is great, but being able to sleep at night is priceless.
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