Planning Your Exit – Guides
Entrepreneur.com provides an extract from their book on how to prepare to sell your business.
They produce quotes from various business brokers, entrepreneurs who’ve sold their business, M&A firms and others with tips on what to do in advance of a sale, what hurdles you are likely to face and the kind of professional assistance you are going to need.
Tips include finding a broker that handles businesses of roughly the same sie as yours. Find one that typically handles much larger businesses and they might not give your sale the attention it deserves. The article also advises to get your house in order, tidy up the accounts, create operating manuals and guides, reduce stock / inventory, give employees incentives to stay and get tax records and legal paperwork in order.
The advice suggests that the highest price is not what most sellers aim for, they want a good mix of price and terms . Other considerations include the trust you have in the buyer, the experience that buyer has in the sector and what plans they have for the business moving forward.
The usual cliches about the sale of a business being a marathon rather than a sprint get a good airing, but the article is still a worthy read for the first time business seller.
Their excerpt is from s from Entrepreneur Media’s book Finance Your Business.
As glamorous as selling your business may sound, entrepreneurs who’ve been there will tell you that it’s an incredibly stressful, time-consuming process fraught with dozens of moving parts and truckloads of paperwork. If you don’t hire the right financial, legal, tax, and business advisors to help shepherd the sale through, you’re doing yourself a great disservice.
Startups.co.uk also have an article this week on how owners of small businesses can plan their exit, written by a business broker, Cavendish Corporate Finance.
They create a 7-point strategy:
- Get your timing right
- Decide your target buyer
- Know your key selling point/s
- Be ready for DD
- Keep running the business
- Show good growth potential
Potential buyers will expect to see not only that the business has hit key milestones, but also has potential for further expansion e.g. demonstrating the ability to broaden your client base or expand into new markets…Ambitious projections need to be supported by compelling evidence as far-fetched claims will not survive the intense scrutiny of the due diligence process.
FA-Mag also has a piece here, and they, too, suggest seven steps. Seven different steps!
- Begin your business with the end in mind
- Do sound business and personal financial management
- Understand business valuations
- Understand who the wrong buyers are
- Run the business with the goal of eventually leaving it
- Protect business value
- Use professional assistance to take the business to market.
Okay, the last one isn’t different.
Nothing raises anxiety more than uncertainty, and business owners are constantly up against the unknown. Market changes, comprehensive tax reform, personal developments—any number of events could dramatically change the way business owners operate their business and their decision-making, particularly when it comes to their exit strategy. Read more.