Ready to sell?

Are you Ready to Sell your Business?

Selling your business for any reason is the culmination of a journey. Naturally, entrepreneurs want to maximise the value of any potential sale, but they must also be realistic. Successful sales are never guaranteed, but you can increase your chances by thinking it through.

In April 2023, studies found UK entrepreneurs had made £11.8 billion from selling their firms the previous year. This year, you could be part of this figure. However, the key to any transaction of this nature is planning.

Here’s what you must know about deciding whether you’re ready to sell your business.

Is there ever a ‘right time’ to sell your business?

No perfect time exists to sell what could be your life’s work. Generally, the right time relies on two things:

• You – Determining the right time involves considering your plans. For example, one in four business owners has already fast-tracked their exit strategies for one reason or another.
• Your Business – How is your business doing? Unsurprisingly, the best time to sell your business is when it’s on an upward trajectory. The second is when the markets are in your favour.

Selling a business is unlike selling any other product. The due diligence and potential lack of buyers means that only one in five firms that want to sell actually do. Whilst you can never guarantee a sale, finding the right time to list your business on the market can bolster your chances.

How to know if a business sale is realistic

Any business can list itself for sale, but the effort will be wasted if your operation isn’t attractive to a buyer. The question is, “If you were a buyer, would you find your company attractive?”

Providing a firm answer requires a period of objective self-reflection, and this is where bringing in an independent expert can prove invaluable. Let’s run through the key questions you must ask:

Is Your Business in a Good Position? – Troubled businesses are challenging to sell because potential buyers often don’t see the value in entering the fray. Plus, why buy a struggling business when you can purchase the assets for a fraction of the price once it enters financial distress?

Is Your Business Well-Organised? – Buyers want to see evidence of a well-run business. This doesn’t only mean well-structured. It also means a strong management team, which proves the business can operate without you.

What Do the Finances Look Like? – Examine your previous three to five financial years. The most attractive businesses have achieved increasing profits over a consistent period.

What is the Company’s Unique Selling Point? – Identifying trade buyers is always a major sticking point. Determine why a buyer would have a good reason to purchase your firm, because absorbing an existing operation is always disruptive regardless of the buyer’s might.

Is the Market Ready for the Business? – Business transaction guides often discuss business prospects, but you must also consider the broader market. Individual firms can prosper even if their niche is suffering a sustained downturn, but that doesn’t mean buyers are currently interested in companies in your niche.

Too many business owners overestimate the value of their organisations while underestimating how interested buyers are likely to be. Don’t be afraid to put a potential sale on hold while determining ways to make your business more attractive.

Planning a sale well in advance is crucial for grooming your business for success. Many entrepreneurs already begin exit planning years in advance of their eventual departures.