Business Advice

I want to sell my business

Cameron Fleming | 12 October 2021 | 3 years ago

I want to sell my business

There are usually only three reasons you sell your business: once when you retire or multiples times as you sell businesses throughout your life to either move on to another project or because a keen competitor is buying you out.

A commonality runs through these three deals: you will want to get the best deal you can out of the sale.

A few quality books have been published on this topic, such as ‘How To Sell Your Business For the Price You Want’ by the prolific business author Mark Blayney, but few small business owners have the time to read a whole book on each business question.

The selling approach

As with most serious business decisions, selling a business needs to be approached systematically. To get the best deal possible, it would be helpful to work through these steps:

  1. Define the reason for selling your business
  2. Get a professional involved
  3. Increasing the attractiveness of your business
    1. Ascertain the worth of your business
    2. How to evaluate your business
  4. The process of selling
  5. Price negotiation
  6. Closing the deal and contract of sales
On the other side of a sale is the buyer. You could be selling to your management team (Management Buy-Out), a trade buyer, an Investor, or to your employees (Employee Ownership Trust). The selling process can be simple or complex, depending on the buyer involved.

To start the process, let us look at the reasons for selling your business.

Step 1 – The reason for selling

Whether you poured blood, sweat and tears into your business or quietly grown it over the years, there comes a day when you want to move into another phase of business life. This will usually involve selling your business or businesses, which is generally a much better idea than closing down. If you get your selling process right, you can make a decent profit.

The process is not complex, but it can be time-consuming, which can sometimes cause people to avoid it. You are reading this because you are business-savvy and want the best outcome.

What is your reason for selling? Retirement, buy-out, relocation or a new pet project? Or is it harsh trading conditions, hampered by pandemics and soaring digital commerce?

As with all investments, the aim is always to buy low and sell high. Exiting on a high is always a good option so try to sell when the business is in a strong trading position. Ideal situations are not always possible, so cutting your losses is sometimes the most suitable option. However, that isn’t always possible, and therefore you will need to cut your losses and exit at a sub-optimal time.

Step 2 – Consider working with a professional

You might be pondering whether the cost of a business broker is really worth it. Short answer: it is. By working with a professional, you will not only save time and weeks, or months, of stress, but you will:

  • Improve your chances of achieving an excellent market price.
  • Avoid mistakes that could be costly.
  • Avoid mistakes that are a complete waste of time.
  • Ensure there is no long-term blowback from the deal.
  • Save yourself enormous amounts of stress.
An experienced agent that knows your industry will:

  • Know where to sell your business.
  • Get a higher closing price than you could independently.
  • Speed up the sale period.
  • Reduce your admin.
The professional can also:

  • Run the evaluation of the business and be subjective with sentimental items and identify undervalued items.
  • Source, evaluate and filter suitable buyers.
  • Astutely protect your interests during tough negotiations.
  • Avoid emotional decisions.
  • Advise you on what information is necessary to disclose and when the disclosure needs to take place.
This will free you to focus on maintaining the business as a viable, going concern. The latter point is vital during the sale process. Negative fluctuations in the operations of the business can undermine the success of a negotiation phase. Therefore, it is a priority that you monitor the business closely to prove to the interested party that the business can operate without you, retaining its value within it and not within you.

Other professionals that will add enormous value to the success of the deal short term and long term are experienced corporate lawyers, accountants and tax experts. Together, this powerhouse of professionals will avoid value erosion, make the deal efficient, and minimise risks.

Step 3 –  Increasing the attractiveness of your business

Clean and repair

It’s your brand’s final show so let it put on a good show to potential buyers. Do not only focus on tidy books but also pay attention to cleaning and tidying up the premises. Attend to broken equipment by repairing it, although, if budget and priority allows, preferably replace it and recoup the replacement cost via a quick ROI in the final deal price.

Attention to detail

The aim is to make the business, financials, brand and assets, as deeply attractive as possible to fill the buyers funnel and to harden the sales price. Therefore, the sooner the preparation begins, the better and attention to detail will be important. This is also where a third-party professional will be of assistance as you may not be able to see the wood for the trees by this stage.

Equipment in working condition

To reiterate, the aesthetics or packaging of the business is as important as the way the standard operating procedures and company books. The level of importance of aesthetics, supported by quantifiable structural strength, increases with equipment and machinery used to run a manufacturing business.

It is critical to have your equipment in good condition if your business falls into this category. It doesn’t have to be cutting edge machinery, but it should look well-maintained, operate appropriately, smoothly and effectively and give the impression that it has been cared for over the years. This will indicate that it can operate for many years to come, therefore not requiring short-term, critical capital expenditure by the buyer.


Another attractive asset to enhance would be your customers. Look at your top key customers and start the process of them renewing their contracts that are close to expiry. If you need them to close off their deal faster, evaluate if you can sweeten the deal with a viable lowering of costs.

Up to date records

And lastly, of course, it is essential to have financial records and other important documentation that is up to date, audited and filed correctly. Don’t start your selling process before this is in order, as it will reflect very negatively on your brand if there is a mad scramble when the buyer requests certain information.

Furthermore, even if there is nothing wrong with the ultimate information produced, the fact that it was not available gives the buyer a psychological impression that something might not be in order or sufficient care has not been taken in the business. What, therefore, could also be wrong that they have not ‘picked up on’?

Step 4 –  The process of selling

Selling could be compared to pitching your company to venture capitalists. You need a ‘pitch deck’ of compelling information – an information memorandum or a prospectus.

Business information memorandum

This business information memorandum, or book, will be a comprehensive, A to Z guide of the entire business. The guide should cover, in detail, how the business operates, what the market segments look like, demographics, etc. It is a quantified business plan, operations plan, a strategy and the general ‘how to run this business’ manual.

When this crucial tome is complete, it needs the clincher – a one-page summary. In this summary, you should cover the following points:

  • The premises
  • Your advantages over competitors and your USP
  • Your customer base
  • The potential for growth and the previous quantified growth
  • Your reason for selling the business
  • The standard financials:
  • Revenue
  • Gross profit
  • EBITDA – Earnings Before Interest, Taxes, Depreciation, and Amortisation


Now you are ready to put your prized possession out there on the market and start attracting buyers. Nowadays, as with many things in our new digital world, this will involve finding a digital platform on which to promote your business for sale.

The most popular online platforms are currently in the UK are Businesses for Sale, Daltons, Rightbiz and Bizdaq. Some entrepreneurs advertise on Gumtree as well, but your business broker will give you the best advice and direction on the most appropriate platform for your industry and target buyers.

As an entrepreneur, you will undoubtedly have many creative ideas on the sale of your business, and, indeed, there are many ways to make a sale. Exercise your entrepreneurial muscles and think outside the box. Potential buyers can be found amongst your competitors, customers and suppliers, and they will have a deeper understanding of your business.

Other useful sales channels can be found in the local and trade publications.

Step 5 – Price negotiation 

In order to get to your price, you will need to go through a multi-faceted calculation process with the resulting selling price referenced to the quantified value, at the date of sale, based on the following:

  1. Calculate the stock on hand via a precise, physical stock take. You should have this audited.
  2. Reconcile your book of debtors and have the value verified by an audit.
  3. Reconcile the depreciated values of your fixed assets on your books.
  4. Audit the values of all financial assets/liquid assets, including cash, stocks, bonds, mutual funds, shares, loans, and bank deposits.
  5. Cash flow can be analysed, and future projections of revenues and costs over 5 years can be calculated. The risk factor should be reflected as a discount.
  6. Valuate the goodwill or other intangibles. Small businesses often use a goodwill calculation method to subtract the fair market value of identifiable assets from the total purchase price.

The right buyer

A good buyer will come prepared for the deal as well. They will also have pre-arranged funding behind them. It is advisable to verify what financing they have in place or how they intend to finance the deal.

Being prepared and packing finance does not necessarily make them a suitable buyer. It would be prudent to assess whether the buyer is experienced in running a business such as yours.

Meet face-to-face

After you have worked through these assessments and have shortlisted your credible buyers, it is time to arrange face-to-face meetings and start your negotiation. In this regard, it is prudent to select quality over quantity, and your business broker professional will qualify and vet any buyer upfront to ensure you only review credible and serious buyers.

Final terms

As part of the seller and buyer price negotiations, there are usually terms agreed as well. For example, you might be requested to stay on as a consultant for the first months, a few years or long term on and off.

In addition, the parties must agree on the method of payment. Therefore, it would be prudent to have considered a few options that you might find suitable before the meeting. Usually, business deals are paid for with a combination of cash and a bank loan, but this does not mean you can’t consider alternatives such as shares and assets. Usually, a higher portion of cash is considered a factor for lowering the price.

Step 6 – Closing the deal and contract of sales

Due diligence

It is very important that, throughout this entire process, you have been honest in all the information you have collated and declared about your business – the good, the bad and the ugly. The buyer that you start negotiating with may invest up to three months reviewing your documentation and public records – including your online reputation. This is the due diligence process.

Have solutions ready

It would be a great pity to have reached this stage and then have some damaging reveal crush the deal. Be upfront and forthright – business people know that businesses have issues. They are not naïve. Be prepared with solution proposals that you work through with your selected buyer.


Once your verbal agreement has been reached, this is drafted into heads of terms, otherwise known as heads. This is an outline of the terms of the deal and is usually not meant to be legally binding at this stage. Instead, the aim of the document is to help smooth the path for both parties to a legally binding document.

You should expect that this document will be redrafted several times. Don’t be frustrated, this is common – there are loads of details that will be overlooked in the first few conversations, and the more complex the business, the more redrafts will most likely be produced.

A binding contract of sale

Once the Due Diligence process has been fully worked through and the final draft is approved, a binding contract of sale will be prepared for signing. Now comes the moment for the buyer to sign a binding contract of sale, and just like that, congratulations, it’s official. It’s not fully wound up, but the business is sold.

Next, you need to work through your legal and administrative responsibilities before starting that exciting new project or taking that well-earned break!

If you enjoyed this article, you might also enjoy ‘What are the different types of exit strategies’. For more helpful business tips, be sure to check out more of our professional business articles today!

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