After a lifetime at the professional coalface, most owner-managers of SMEs dream of the pot at the end of the rainbow – the money they will earn from selling their business.
Ideally, planning for exit will start at least two – preferably more – years in advance.
Here are four tips to help you maximise your sale price. After all, you’ve earned it.
1. Choose your advisers – accountant, lawyer, broker – very carefully.
Try to find advisers who have specific expertise in your sector. If, for instance, you own a couple of garages, you are more likely to get better results from advisers who have some experience, and track record, of the automotive trade.
There are specialist acquisitions-and-disposals consultancies who can act as your principal adviser. Their fee will probably be geared to a percentage of the ultimate sale price – negotiate to get the best deal for you.
2. Do your research. And two bidders are better than one.
Do your homework. Is there a potential acquirer you know about? Better still, is there more than one company who would like to take yours over? Once you have attracted enquiries, don’t be in a rush, and don’t let your emotions get in the way. And remember – two bidders are better than one, because an ‘auction’ process will almost certainly be to your advantage.
3. Get your business into shape
Buyers will evaluate your business, warts and all, and will obviously focus on your bottom line. So do everything you need to do to get your business in the best shape it’s ever been in. Cut unnecessary expenditure and maximise your profits. The sale price will almost certainly be a reflection of your firm’s profitability.
4. Do you still want to be involved?
Post-sale, you might still need to be involved in the business as part of an earn-out arrangement. But think long-term – once the final payment has been made, would you like to still be involved in some kind of part-time, consultancy or Board appointment
You may simply want to clear off and lie on a beach in Bermuda (or Southend!). But remember – there is more to life than that , and you will still have emotional ties from the business you built in the first place.