Five Essential Steps To Prepare Your Business For Sale – Financial Services

To paraphrase Benjamin Franklin, if you fail to prepare, prepare
to fail – and that certainly applies to selling a business or
company. You might still sell it, but you will almost certainly
sell it for less.

Selling a business may be the most important decision a business
owner may take and it is never too early to bring in quality
advisors to assist with the sale process (and potentially to help
find potential buyers). This will help into reliably establish the
business value and asking price. A buyer will generally ask you to
verify what you are telling them, which means you could be liable
if it turns out later that the information you provided was
inaccurate.

Below are some of the key points you should consider when
preparing your business for sale:

1. Source and store historical financial
information. This will form the basis of pricing and
the better quality it is, the better chance you will have of
achieving your asking price. If you are, or have, a good
accountant, then you have a head start. If not, bring one in to
prepare this information for you. It will repay the cost and time
investment many times over.

2. Refresh your business plan. You will
need a business plan to demonstrate the potential of your business
to a buyer, highlighting what and where the growth opportunities
are, the financial projections and future profit projections. A
quality business plan in a recognisable format backed by verifiable
information is a vital tool to negotiate a decent price.

3. Assemble a strong management team.  A
buyer will often want to ensure the business they are buying is
capable of operating, and growing, without you. Having a reliable
and experienced management team will be key to continuing to
successfully drive the business forward in your absence. This
should make your business more attractive to a buyer and hopefully
achieve a higher sale price.

4. Compile details of customers and
suppliers. You will need to provide details of key
sales and the underlying contracts that back them up (be careful
not to give too much away to competitors at the early stages of the
process). Your supply chain can also be critical, and you will need
to evidence its resilience. If your business is too reliant on one
customer or supplier, this is an identifiable risk, so try and
manage that risk if you can. Often contracts can also be incomplete
or difficult to find so get them in order before it becomes a
problem.

5. Finesse your legal documents. Legal
housekeeping is more important than many think, as a buyer needs to
know they are actually getting what they pay for. The buyer is
likely to ask you to stand behind what you tell them through
contractual warranties, so make sure that you have the evidence to
do so. The main areas to consider are:

• data protection;




• property leases or title deeds;




• employee contracts – particularly for key employees,
  including details of any share options you have granted;




• details of pension rights (buyers are wary of final salary
  pension schemes and will check this area thoroughly);




• intellectual property rights can be very important for value
  – ensure you have proper protection or registration for trade
  marks and patents, where applicable, and that you are not
  contravening anyone else’s rights;




• statutory books and key registers – if you are selling a
  company the shares are what they are buying and they will need to
  see these are complete and accurate; and




• details of any litigation or disputes – and the advice
  you received around them.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.