Planning the sale of your business article
The sale of an owner managed private business can be a difficult activity for three reasons:
Firstly: There is no established market place for this type of business
Secondly: Many of us have built our businesses around our individual skill sets and in most cases the business will reflect our own personalities. We can grow comfortable with our business, naturally concentrating on the activities we understand and enjoy. In doing so there is a danger that we ignore areas a prospective acquirer will view as weaknesses.
Thirdly: Because of their different circumstances, prospective purchasers may have a very different view of the relative value of the components of your business to you, and to each other.
What will prospective purchasers look for?
Prospective purchasers will be deciding whether to invest a large sum of money in acquiring your business. They will critically assess it, in a way you may not have, paying particular attention to the ways in which your business can be made to complement and enhance theirs. They could be very skilled at making these assessments.
Amongst other things they will assess the extent to which your business will respond quickly and effectively to market and other changes. They will consider the strength of second tier management and the ease with which they can operate and develop the business without you. In many cases they will consider the ease with which they can integrate your business with their existing operations.
What should you do about it?
In preparing your business for sale, take time to identify the attributes of your business that will be appealing to external investors and those that will be unappealing. In the years before sale you should be able to develop the positive and mitigate the negative attributes so as to create a business that is attractive to investors, leading to a quicker sale and a higher transaction value.
Make sure you are effectively servicing markets that will be of interest to prospective purchasers when you want to make the sale. Time spent on planning can significantly increase the sale value of your business. The earlier you start the more likely you are to succeed.
Azure Partners have developed businesses for sale or flotation personally and are experinced in helping others do the same. Call 0207 100 1233 or contact mike.robson@azurepartners.co.uk