Belfast Telegraph

Business disposals

Richard Gillan
By:
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Business owners should always have an eye on an exit strategy, even if it is not a short-term consideration.
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Circumstances can change quickly, which lead to a disposal becoming necessary or in the owners’ best interests. Preference is always to sell when you want to, rather than when you have to.

Selling your business can be a time-consuming, stressful, and often emotional journey, particularly when an owner has invested many years and much effort in making the company a success.

Even when exploring the sale process, it is important to maintain focus on core operations in order to protect the value of the business.

Selling requires forward-planning and a structured process to maximise returns. Preparation is critical to ensure your business is optimised for sale prior to commencing a disposal process.

Selecting a time to sell which suits you, when numbers are hitting their targets and cash position is maximised, will be beneficial in achieving a higher price for the business.

Owners should look to build the business value prior to commencing a sale process. Take a step back and view the business through the eyes of a buyer – what would you look for when acquiring a business in your industry? What can be done to reduce risk for the buyer? Certain attributes will make a business appear more attractive, such as recurring revenue streams, and long-term relationships with customers and suppliers. Ensuring that agreements are in place during the normal course of business can reduce any unnecessary complications. Having an effective, incentivised management team in place will also allay concerns for a buyer.

Any potential buyer will spend time reviewing the history of your business both from a financial and operational perspective. Financial information will need to be provided, often going back three-years or more. Well prepared and ‘clean’ financial information, requiring fewer adjustments will lessen the confusion for a potential buyer, and add credibility that information is free from error. This will protect against deal failure or ‘price chipping’.

Owners can often have unrealistic price expectations, which can derail a process when buyers and sellers have differing opinions about the value of the business. A third-party valuation is the best way to provide an objective estimate of what a business may be worth, add creditability to the negotiating process, and help the chances of a successful sale.

An expert team should have experience of recent deals to underpin and defend the value of the business. They will also be able to handle the sale process, allowing you to focus on maintaining business performance.

An adviser will help guide you through the process, presenting the business in the best possible light, sourcing potential buyers, structuring the deal, and leading negotiations to achieve the best result for you.