Planning the sale of your business checklist
When developing your business for sale, consider the following criteria from an acquirer's perspective. In general, the higher you score the higher your sale value is likely to be.
Your market
Do you have a clear marketing proposition in all of the markets you serve?
Do your products and services have real advantages over those of your competitors?
Are you the market leader or a significant presence in the markets you serve (attractive to strategic investors)?
Is the market expanding - can you access adjacent markets that are expanding?
How easy is it for the acquirer to replicate your service in other sectors or geographies?
Are your products or services attractively branded - do you and they have a good image?
Have you business streams that are peripheral to your core business (a potential nuisance for an acquirer)?
Is client loyalty dependant on the current owners of the business?
Are there any economic, political or legislative threats to your business?
Your management
When you have left, will you leave behind a robust and complete management team with:
The correct mix of knowledge, skills and experience to operate the company day-to-day?
The motivation to take the company forward?
A track record of working well together?
The ability to operate without help from you?
The ability to work with an acquirer?
Your results and risks
Are the following on an upward trajectory:
Turnover
Maintainable earnings (profit after tax excluding exceptional items)
Cashflow
What is the quality of the revenue stream?
Transaction based or ongoing
High or low levels of repeat business
Is there a strong balance sheet?
Is there a reliance on a small number of customers (any customers over 10% of revenue)?
Is there a heavy reliance on one supplier - includes the bank as a supplier nowadays?
Is there a potential liability to past customers?
Your Company
Has compliance with industry and statutory requirements been strong?
Is there any major or unquantifiable litigation pending?
Are there minority shareholders and are their interests in line with the major shareholders?
Are your staff sufficiently smart, motivated and trained?
Is staff turnover low?
Are premises adequate for future needs?
You
Do you have good reasons for selling?
Is there a danger of you competing directly or indirectly?
Will you cover the necessary warranties?
How will potential acquirers score you and how can you improve that score?
Azure Partners are experienced in developing businesses for sale. Call 0207 100 1233 or contact mike.robson@azurepartners.co.uk