Three things to consider when selling your business

13 Sep 2017

 

There comes a time when owner-managers decide they are ready to sell their business – either hand over the reins to a family member or just change up for something different. Plenty of people have a really solid plan in place as it can take years to implement a business sale, but we have added in a few of our own key points to consider if you are thinking about taking on the task.

 

Don’t be tempted to over-value

Remember you are likely to value your business higher than a prospective buyer. There is nothing wrong with aiming high, but you won’t necessarily get money for potential alone. If a business is simply a concept without a revenue stream then there  is rarely value to a prospective buyer.  In fact, there will be no real business to sell.

If you think this applies to you, perhaps ask yourself the question: “Is my business ready to sell?” What if you waited a few years to let your business realise its potential?  The old mantra of ‘build, grow, sell’ has it that a third of the value of a business is created in each of these there phases. 

 

But, don’t under-value either

Linking in to the above, that doesn’t necessarily mean you should compromise completely and end up under-selling your business. There will always be a discrepancy in how much you think your business is worth, and what others are willing to pay. This is even truer of smaller businesses, but it can happen throughout the chain.   The objective should be for you to claim a share in the future value which the new owner will build with your business, i.e. to sell if you can partly on the potential in the business which is still to be realised.

 

Are you in?

Finally, the all-important point to consider is – are you ready? Can you cope with the changes on the horizon and are you clear on the pathway forward. Rapidly changing technology, personnel movers and shakers and growing business trends can feel like a daunting prospect for many business owners. If you are ready, be prepared to go with your gut instinct and plan, plan, plan for a successful sale!

 

If you would like some advice for your business, whether it is starting up, selling up or sprucing up your business plan, contact the Corporate team at DMH Stallard using the details below.

 

 

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