"One of the key issues in selling a business is staff."
Contact Oakshield to discuss this topic further.
This is our 10-step Process
Selling a business is a major decision, particularly when you may well have put years of hard work into it. So, how do you best go about it?
Step 1 - Find a good broker
A good broker is professional and looks after your interest at all times. Just like you would get a doctor to review your health, a broker is qualified to review your business and market the business in the best way suitable.
Selling a business takes time and requires the broker to have a solid understanding from the seller. In this way the broker will be able to talk with confidence and knowledge about your business to interested parties.
Remember, a broker is working for you and bound by law to operate in your best interests. Be wary of brokers with hundreds of listings as we believe they cannot possibly dedicate their time to your business, in the way it should be treated.
Step 2 - Prepare your business for sale
Professionalism and objectivity are essential. Selling your business yourself is difficult and usually meets with little success. You are probably emotionally attached to your business, and very competent at running it, but a new person will look at it from a very different perspective.
A good broker will do this to ensure the business is prepared for the market correctly and without bias. They will look at it as a commercial proposition and going concern, thereby ensuring the best available result.
The books of account should be brought into line with approved accounting practices, if necessary, and extraneous and potentially distracting issues dealt with and put to rest.
Step 3 - Market appraisal and review
After an initial meeting, the broker will request a list of information required to appraise the business. The appraisal is then done in conjunction with market data and previous sales history on similar type businesses.
The appraisal will generate information relating to the price or worth of the business and highlight any issues for potential buyers. It will also include a short list of recommendations for you to action in order to get the business ‘organised’ and ready for the market.
Step 4 - The Information Memorandum
An Information Memorandum, prepared by the broker, outlines the business in document form.
It should include such information as trading hours, history, location, business strengths and opportunities, pricing, staff summary and financials. This is the document prospective buyers will review. Interested parties may receive it only after completing a Confidentiality Agreement.
Step 5 - Marketing
Effective marketing of your business is about communicating with prospective buyers and should include both indirect and direct marketing. Various media, including newspapers and web sites, form an important, indirect means of reaching a wide number of people.
A good broker will also use direct marketing techniques by way of their own database of buyers that may include one or more who have indicated an interest in your type of business in the past. These buyers are usually more experienced and also more ready to approach the process with a more “commercial” outlook.
Step 6 - Business Inspection
Once the broker has interviewed potential buyers, inspections of your business and meetings with yourself will be organised. The seller needs to be flexible as meetings and inspections may need to be carried out during operating hours.
Most interested buyers require more than one inspection and several discussions with you to fully understand the business. They will also likely require better access to financials and records, to assist in their decision process.
A good broker will take steps to ensure potential buyers are genuine, and not just “fishing” for data on your business.
Step 7 - The Offer
An offer may be made verbally initially and then, later, as a written document or contract. A good broker will have qualified the buyer in advance to ascertain their financial capability and to match skills and ambitions as much as possible.
The broker’s ongoing role is to act as an independent third party, to some extent, to facilitate smooth negotiations and transfer of ownership.
Step 8 - Due Diligence
Once an offer is accepted and a contract signed then due diligence begins. This process usually involves the buyer and seller, and their respective accountants, reviewing all facets of the business in detail, including financials, licences and leases where relevant.
It is also during this phase that approvals are sought from franchise groups, if necessary, and the buyer’s financial sources are activated. This process can take up to three weeks.
Step 9 - Handover
Once the business is in unconditional settlement, training and hand over to the new owner commences. Normally this would be for about 20-30 days, though it may be longer, depending upon circumstances.
Step 10 - Enjoy your retirement or start planning the strategies and investment process for your next venture!
NOTE - One of the key issues we have found, in selling a business, is staff. Click here to read a section dedicated to this topic and the best way to handle it.
This is something you may be able to do yourself, to some extent. However, we are are happy to offer you a Free Business Appraisal, in order for you to at least understand what it is you are preparing to sell, and perhaps how.
The other concern we have, for those who attempt to prepare their own business for sale, is how much work is involved and the potential impact that will have on short to medium-term profitability and therefore upon the expected sale price.
If a complex, time-consuming activity is not your core business activity then it is in your best interest to farm it out to a specialist in that field, while you concentrate on running your business more effectively.
Contact Oakshield, to see whether we might be in a position to assist with your sale preparation efforts, before you plunge time and resources into something big.
See the eBook "Prepare For Sale" for more information.