Selling a Business in the UK – Steps to Selling Your Company
There are several steps you must take in order to begin and complete the process successfully and as efficiently as possible. Here, we outline the key stages to go through when selling your business.
Prepare the business for a sale
The first step you need to take is to prepare the business for sale. You need to establish how appealing the business is going to be for prospective buyers, and if you can do anything to make it stand out and more saleable. Is the business a market leader? Are there plans to expand or is expansion easily achievable? Is a profit being turned consistently? Consider these points, but also ensure there are no disputes hanging over the organisation, and all administration and paperwork is up to date and well-organised.
Get a Business Valuation
Once your business is prepared for sale, it is time to get a valuation. It’s not just the business assets that are considered – reputation, staff and liabilities will all be looked at and analysed by any buyer, so it is essential to have a good understanding of where you stand in all of these areas. Ways to get a valuation include the common price to earnings ratio which gives any prospective buyer an idea on when they will start to see a profit on their investment.
There are other important things to consider – what is going to happen to your staff? Are they moving with you to another business venture, or are they going to continue working for the current organisation? Is the property included in the business sale or is this something that is a separate lease? These all need consideration as it is likely that some permissions may need to be granted for the different aspects of sale.
It is important to strike a balance when you are valuing your business ahead of a potential sale. It is your hard work, a business you have developed into an attractive sale prospect. Yet at the same time, you don’t want to go in too hard – asking way over what it is worth is just going to put off buyers and you will be lucky to get any interest at all
Do I Need to Use a Broker To Sell My Business?
With the business prepped for sale, once you have fair valuation you are happy to go with, it is almost time to go to market and sell your business. Finding the right business broker is critical to successfully closing the deal as soon as possible – this is where Hilton Smythe can help. Using a professional, well-respected broker can really help bring your business to the attention of buyers in the relevant areas. They are experts in the field and can advise at all stages of the selling process.
Where to Advertise Your Business
It’s important at this stage to get your business out there in front of as many relevant people as possible. We mentioned the potential to utilise a broker or selling agent in the previous section, and this is where the benefits of doing so can come to fruition. By selling your business through Hilton
Smythe, you can access our database of tens of thousands of active, registered buyers, dramatically increasing the chances of a successful sale.
Carrying Out the Sale
The terms of sale are critical, and this is something that must be completed with the keenest eye for detail. Everything needs to be laid out in black and white – all parties of the sale must have total understanding of the terms of sale. Everything from payment terms, when you are going to pay, the final agreed price, and when ownership is going to be transferred, must be clear at this stage. These are all aspects of the sale that a solicitor will be on hand to assist and advise you with. Ensuring everything is clear at the point of sale reduces the chances of any misunderstanding further down the line.
What Do I Do After I Have Sold My Business?
Once your business has transferred to a new owner, you will need to update your team. They will usually become employees of the new owner, unless a redundancy situation applies, so it is crucial to keep staff updated on the progression of the sale. There is also certain information about the transfer you are required to give your employees, employee representatives and the new employer by law, as well as by possible employee consultation requirements.
How Quickly Can I Sell My Business?
Various things can impact the time taken to sell your business in the UK. Unexpected changes in market conditions, company finances and sector health can all impact the time taken, as well as in the current climate, Brexit and Covid-19.
Do You Pay Tax While Selling a Business?
If you have sold your business for a profit, you will need to pay Capital Gains Tax (CTG). The amount of tax paid will depend on the amount of profit made through the sale, and any tax payments required must be completed within 12 months.
Why should I sell my business? Reasons to sell your company
Various factors come into play when discussing the reasons for selling your company. You may be ready to retire – often a sign you have built up a successful business to be proud of – and it’s time to put your feet up and enjoy the fruits of your labour. You may simply have fallen out of love with your business – this is a sign that it is time to move on. After building up the business, the last thing you want is for it, and you, to suffer financially as you no longer have the desire and the drive to run it to its full potential. Profits being up, profits being down, yourself no longer being an asset to the business or simply a new opportunity coming along – these are all reasons the time may be right to sell up. Hilton Smythe can help you once you feel you are in the position to sell.
What is SAV when buying a business?
SAV is an abbreviation for Stock at Valuation, which basically is the value of stock held by a business at any given time. Typically, the stock will be valued just before the conclusion of a sale of a business and used to determine the final sum paid by the buyer to the seller to complete the sale. SAV is different from the valuation of the business itself, as stock is a moving part. Overheads, sales and profits will determine the future of the business to a greater extent than the stock at the point of sale.
We are here to help
We are here to help
With your dedicated experienced business advisers and their support team together with our international reach, we are best-placed to assist in the sale of your company. We take a proven,
disciplined and pragmatic approach to selling companies in the £1M to £20M space. It starts with us getting to know you and your business inside out, so that we can understand your goals and ambitions, and more importantly, how to make them happen