Confused about whether it is a good time to sell your business? Given the tone of the current economic news, you’d be forgiven for thinking that now simply isn’t the best time to undertake a company sale.

Getting the timing right is always a concern, but recognising the handful of factors that influence saleability will position both the owner, and the company, to better achieve the type of sale you deserve. In short, by focusing on the following factors prior to the sale process, you can achieve success.

To start, preparation is key and will be highly beneficial when you do choose to undertake a sale. This is where retaining experienced company sale advisors can prove its worth, by assisting with the essential tasks around planning and preparing for the sale.

Preparation includes gathering all of the essential data that might be relevant to an acquirer as they consider the purchase. Adequate financial reporting will be tremendously helpful in this regard, as are accurate monthly management accounts. Equally important is ensuring all contracts are up to date, such as HR, Suppliers and Customers, along with insurances and leases.

Recognise that other shareholders need to be consulted as a matter of courtesy, before a substantive offer to purchase the company is accepted. There can be serious repercussions if you choose to sell the business without the consent of a minority shareholder, including de-railing the entire deal.

Avoid being fixated with the ‘hockey stick’ growth effect on valuation. This is where, based on your current 12 month forecasts, the business plan is set to achieve significant turnover growth. An acquirer will quickly pick apart whether or not this growth is sustainable, or simply an exceptional year with limited sustainability.

It goes without saying that recurring revenue and a defensible EBITDA (normalised profit) will be highly beneficial to achieving a sale. That said, most acquirers are focused on the future trajectory of the business once under new ownership, which will require a convincing business plan.  Your track record i.e. satisfied clients and references is equally as important.

It’s worth noting that whoever’s going to be sitting the other side of the table – whether they’re financial acquirers and investors such as Private Equity firms or the growing number of international trade acquirers looking to buy or invest here in the UK, they’re likely to have significant cash reserves to deploy on investments, including Mergers and Acquisitions.

Lastly, the above factors should be viewed as helpful ideas, rather than strict rules. It is worth remembering that companies are sold every day in a variety of circumstances. For well-managed businesses with a profitable trading history and strong value drivers, the appetite and demand for such businesses persists, even in the face of market volatility. ■

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Considering a sale of your business?

Our free Business Owners Masterclass on 12th October will address these and other complexities of selling a business, including how companies are valued, as well as other fundamentals, such as earn-outs, handling negotiations, and due diligence.

Register your interest now: https://www.evolutioncbs.co.uk/events/

About Us

As a long-established premium provider of business sale advisory services to UK businesses, EvolutionCBS offers business owners a complimentary and confidential discussion on how their specific objectives could be met and provide pragmatic, practical advice on how to begin preparing both themselves and their businesses for a future sale.

EvolutionCBS works with owners of UK businesses in any sector, finding buyers from around the world through highly targeted research and supporting clients with dedicated Director-led teams, at every stage of their journey to a successful sale.

If you are an owner or shareholder of a business and would like a no obligation consultation on the sale of your business, please email:  info@evolutioncbs.co.uk or contact us on Tel: 0118 959 8224.

About the Author

Nolan John is Marketing and Research Manager at EvolutionCBS. A graduate from Nottingham Law School and Leicester University, he is an experienced Mergers and Acquisitions professional and Content Marketer, with nearly 20 years’ experience of deal making in the UK, including cross border transactions.