Taking a step back: How to sell your business
As a new financial year looms you may be thinking about the future of your business. Instead of planning for future growth, you may be thinking about taking a step back or moving on from your business altogether.
If you’re thinking about selling, you will need to consider how you will prepare your business for this. For some, this may mean sprucing up their operations with cosmetic improvements while for others laying the groundwork for the successful sale of a business can be one of the biggest challenges in the company’s life cycle. Ahead of our exit strategies for business owners seminar in Melbourne in July (and again in August), here are some things to consider before you make your decision.
Buyers are looking for potential and to make the business their own
Sometimes it may take years to prepare your business for sale and to ensure your company has as many of the attractive elements as possible that a buyer or investor is seeking. These include:
- consistently growing revenue and profits
- long term and favourable contracts
- systems and processes
- protected intellectual property
- solid infrastructure
- a team of high-performing staff members.
You have probably heard that it is important not to have the business dependent on you. Your business will get a premium offer if you can walk away from it and it continues to grow on its own. This means that your business can continue to run effectively for your prospective buyer, and quite possibly will get you a premium too.
Finding the right time to find the right buyer
As a seller you want to realise the highest value you can for your business and must commit significant effort to steer the process carefully. However, day- to-day operations must remain sharp and managers focused. When that balance suffers, sales transactions can falter on anything from failures of awareness to subtle tactical missteps.
There are many options open to you, but typically the journey for your exit strategy will look like this:
1. Make the decision to sell
Your exit begins with identifying your business and personal goals – what do you want the outcome to be? This decision process will determine the best exit strategy and right type of buyer.
2. Find the right buyer
Finding the right buyer means seeing your business through their eyes and understanding how their various objectives and value drivers fit with the your personal and financial goals.
3. Preparing the business for sale
There are many tactics to consider and mistakes to avoid, so do your research and seek advice to ensure the process is as smooth as possible for you and your staff. Our seminar is a great place to start if you’re feeling uncertain about how to sell.
4. The deal process
It’s the final step, but to get from negotiation to closing can still be full of pitfalls. Some people who express interest in a business will not be legitimate buyers. A good adviser will know how to ask the right questions and have the expertise to identify qualified buyers before your time and attention is wasted. This isn’t a particularly complex or time-intensive step, but if it isn’t done, you could be wasting a lot of time and effort speaking with unqualified buyers and risk the confidentiality of the entire process.
Exit strategies for business owners is a two-hour seminar for business owners who want to understand the implications of selling, exiting or retiring. The seminar is on in Melbourne on Thursday 7 July and Monday 22 August and in Narre Warren on Wednesday 24 August. Visit the course page to register.
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