Selling Your Business
At some point all business owners will want to realise the value of their investment, by selling all or part of their stake. When they do, they will want to achieve the maximum sale value possible. There are several considerations to be taken into account during a sale process. These include the choice of advisers, the route (e.g. trade, Private Equity, IPO) and whether or not to undertake any pre-sale due diligence. Other actions, if taken early enough, could increase the attractiveness and/or value of a business. These are likely to be some of the biggest decisions that you will make as a business owner.
Factors to Generate Maximum Sale Value
Most businesses are valued according to their level of sustainable earnings. Potential acquirers are interested in the quality as well as the quantity of earnings. This will determine the earnings ratio, or ‘multiple’, that is applied to the earnings. The combination of these two factors will generate the sale price. Hence, in order to achieve the maximum sale value for your business, it is worth considering these aspects at all times.
Planning for a Business Sale
The optimal point at which to start planning for a business sale will vary from one business to another. It will depend on various factors. Do the current owners wish to retain a stake? Do they want to continue to be involved after the sale, or walk away completely?
Regardless, it is never too early to start thinking about this process and putting appropriate plans in place. All too often, for example, small businesses fail to achieve their maximum sale value because of inadequate succession planning.
Why Hire an External Consultant?
Planning and executing the sale of a business can be a distracting and disruptive experience. Many owners find that their business performance dips during a sale process, simply because they cannot devote sufficient time to overseeing day-to-day operations. This can have an adverse effect on the final sale price. In addition, it may not be appropriate for members of the Finance team to be aware of or involved in the sale process. For these reasons, it may be desirable to engage an external consultant.
How We Can Help
Having managed the sale of two owner-manager businesses, Tony can guide you through this process and advise on the steps necessary to generate the best outcome. There may be particular measures that can be undertaken to improve the attractiveness of your business to potential purchasers. These will not only increase the pool of interested parties but also maximise the price they will be prepared to offer.