Preparing for a Sale

When you're setting up your business it's essential to think about how you'll ultimately end your involvement with it.

A well thought-out exit strategy can help you to maximise the value you get from your business, successfully market your business to potential buyers or investors and ensure you end your involvement with as little disruption to the business as possible.

Regardless of whether your exit occurs to a planned schedule or you are forced to make a move for unexpected reasons, the decisions you make when setting up and how you prepare for a sale can affect how easy it will be to exit your business and maximise its value.
 
As part of preparing for a sale, matters such as structure and tax planning should be in place often many years in advance, but there will be some more detailed matters relating specifically to the business that you need to focus on typically 18-24 months before a planned sale (often called grooming a business for sale) Some of the key actions to consider and address are shown below, depending on your business there may be matters unique to your situation but in general key areas to focus on and ensure they are in order include:

  • Try to show a stable financial pattern, consider the timing of major purchases or one off exceptional costs
  • Be realistic with depreciation charges, provisions for obsolete stock, and bad debt provisions
  • Dispose of under used assets
  • Improve your working capital position by good stock management, tighter credit control, supplier payment management
  • Ensure management information systems are working efficiently, you need to show the business is under control
  • All assets should be well maintained and presented in good condition
  • Where possible formalise contracts with customers and suppliers. Guaranteed revenue streams can have a large impact on the value of a business.
  • Implement incentive schemes for key staff, e.g. bonus schemes, share option schemes. Look at the notice period of key staff.
  • Try where possible to spread your reliance away from a small number of customers. The more the business depends on it sales coming from a small number of customers the greater the impact will be on the value of your business.
  • Consider any loose ends, for example if your property lease is expiring, think carefully about committing the business to a long term agreement.


Contact Us now to see how we can help you maximise the value of your business by providing advice on preparing for a sale.


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