Top tips for preparing your business for sale to extract best value
Business investors Paul Seabridge and Jordan Hastie who run their own Mergers and Acquisitions firm and have between them completed over 50 transactions share their thoughts.
1. Get your house in order Tidy up the accounts and ensure you are able to produce up to date numbers. The sign of a well run business is one that can produce profit and loss account, balance sheet, aged debtors and creditors. One that can’t or is wholly reliant on an external accountant isn’t.
2. Make the business reliant on you no more To avoid lengthy earn out or deferred terms make the business less reliant on you. Do you have a Managing Director that runs the business ? If not consider hiring or promoting one. If you still deal with staff and customers on a day to day basis the business still needs you. Any incoming new owner will want to protect goodwill and asking you to be involved in a hand over or earn out protects this. If the business doesn’t need you then you have good argument for more cash and less handover period.
3. Prepare an IM Write a few short paragraphs that summarise the business, it’s unique parts and a summary consolidated balance sheet and P&L. Write down why a buyer would be interested.
Write a list of the people that may buy it ... think staff, customers, suppliers, competitors.
4. Appoint an advisor There is no reason why you can not sell your business yourself. An advisor could however help with 1-3 above and also act as a “middleman” to assist in negotiations. Most will charge you however whether you are successful or not - choose one that works on a success fee.
If you are thinking of selling and have a business with £2m revenues or more Saalbach Equities are in the market to buy. We buy and invest in SMEs in the UK, USA and SE Asia.