Thinking of selling your business

May 8, 2013

Croombs Chartered Accountants in Hampshire

At some point in every business owners life they think about selling their business. Whether they have just had enough or they are coming to retirement age, it is important to make sure they do the right things.

This month I will be highlighting some important points to consider, whether you are starting to think about selling your business or whether you are already in the process of selling.

  1. How much do you want to sell your business for?  Is this realistic?  Your business is only worth what someone wants to pay for it, but do not under sell it!
  2. How will the purchaser pay you for the business?  It is unlikely you will receive all the money up front, a significant amount will probably be held back to be paid in instalments.
  3. When do you want to sell your business?  You need to consider the tax implications of the timing of the sale.
  4. Make sure your business can run, to an extent, without you.  If it can’t then take steps to make sure it can!
  5. Make sure there are documented systems in place within the business.  This will make it easier for a purchaser to hit the ground running.
  6. You will probably have to stay on for a length of time after you have sold your business.  Issues may occur after the sale which the new owner will need your help with.
  7. Identify recurring income and contracts as these are particularly valuable to purchasers.
  8. Make sure your business has control of the money owed to it.   A buyer will not want to take on customers who take a long time to pay their bills, and this may reduce the selling price.
  9. Make sure your costs are as streamlined as possible.  Cut out wastage as this will improve profit and help you to achieve a higher sale price.
  10. Make sure your employees are a saleable part of the business.  Good staff are an asset and a purchaser will want to retain them as they will enhance the value of the business in the future.  Bad staff will only harm the value.

 

If you have some time before you need to sell, try to get the above points cleared to maximise your selling price.  You need to “groom” your business for sale if you are to maximise the money you will receive.

Croombs Chartered Accountants are available for a free, no obligation meeting on how we can help your business, from helping you understand the numbers to discussing ways of minimising tax liabilities

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