Exit Strategy

Prepare for sale: How to get your business in order

Jo Thornley | 31 January 2017 | 7 years ago

Prepare for sale - is everything in order?
Prepare for sale – is everything in order?
it’s probably taken years to grow your business into what it is today, possibly with the view to sell. So why make it hard to find the right buyer, willing to pay the right price, for want of a few months? careful preparation?

If you wish to attract serious interest in your business, it’s essential to commit time and effort to the sale preparation process. And to make a business as attractive to prospective buyers as possible, it’s worth looking at the business from a buyer’s perspective.

Prepare for sale: Books, records and documents

Potential buyers will want to examine your trading history and that means looking through your financial statements. They will expect your accounts probably the last three years worth to be tidy and up to date, and will, in any event, test these assumptions during the due diligence phase.

Reviewing revenues and costs, the buyer will conduct cash flow analysis and profile the sources and usage of cash.
Buyers will also wish to see documentation of fixed assets, examine your liabilities especially any business debt agreements and inspect tax records.

Depending on your sector and scale of operations, the buyer might request a host of other documents, including employment contracts, payroll records, tenders, lease agreements, licences and permits.

Look as if you mean business

Clearly, the physical condition of your premises, its fixtures and fittings and any equipment will be critical in forming that all-important first impression. To prepare for sale, equipment should be well-maintained, properly serviced and clearly fit for purpose.

In advance of its from potential purchasers you should, as a bare minimum, thoroughly spring clean your premises. You may even repaint and refurnish the premises and replace ageing equipment so long as the costs of doing so are not prohibitive.

Maintain confidentiality

This is where things get tricky. To prepare for sale you need to decide who in your business needs to know about the prospective sale the fewer the better, lest the information leak out and your staff take fright and start job-hunting or competitors poach your staff or customers.

If customers become aware of your plans, the uncertainty about their future relationship with new owners may prompt them to delay or abandon contract renewals.

You need to work out strategies for gathering and sharing information with buyers without alerting staff. Harder still will be showing potential buyers around your premises without arousing suspicion. A credible cover story and confidentiality processes are things to formulate before you reach this stage.

Get professional advice

When you finally put your business the market, prospective buyers will want to know why your business is for sale. They will also wish to verify that you have secured a professional, independent business valuation and the methodology used to arrive at your listing price.

A pre-qualification process and key documents must also be in place, ready for phased disclosure to serious qualified buyers.

Requiring experience and nous in the business-sales process, the above steps are more easily tackled with the help of a qualified, experienced and trustworthy business transfer agent. Buyers who go it alone might avoid paying agent fees and commissions, but often at the cost of great stress, a slower sales process, abandoned negotiations and/or, ultimately, a lower sale price.

Related Topics

How to Sell a Business
30 January 2023

How to Sell a Business

Read More →
Top Tips on Preparing Your Business for Exit
14 February 2022

Top Tips on Preparing Your Business for Exit

Read More →
Everything You Need To Know About Selling a Business
6 January 2022

Everything You Need To Know About Selling a Business

Read More →
How to sell your business successfully
22 January 2020

How to sell your business successfully

Read More →
Restructuring to save your business: Which route should you take?
11 March 2019

Restructuring to save your business: Which route should you take?

Read More →
Divorcing your business partner: Every legal question you need to ask
6 December 2018

Divorcing your business partner: Every legal question you need to ask

Read More →

If you enjoy reading our articles,
why not sign up for our newsletter?

We commit to just delivering high-quality material that is specially crafted for our audience.

Join Our Newsletter