TRAPPED IN A CONTRACT?
June 13, 2023
Buying a Business: Considering an existing business
July 12, 2023
SELLING YOUR BUSINESS?
Here are some tips for you when thinking of selling your business
#1: Have a Diverse Customer base.
Your total turnover is derived from your customer base. Having a variety of clients makes your business solid. In the eyes of a buyer the business is safe and solid even in the event of losing a customer or two the business will not suffer a major loss.
#2: Ensure you have a strong management team.
Having a capable management team that can look after the business when you are not there, or post sale is a biggie for a buyer. You open your business to a bigger pool of potential buyers when you have a management team in place. The potential buyer might not have a clue on how to run this business thus a capable team will play a major role around the negotiating table.
#3: Have Contracts in Place
Another important factor to a potential buyer is the number of contracts (revenue) already in place. This is a guarantee that the business will carry on during the settling down period and beyond and guarantee income (sales) for the future
#4: Be able to show and prove good growth in the past and predicted for the future.
Buyers are really interested in the next 3 to 5 years growth as this will show where the business is heading but in the same breath a buyer will want to know what has happened in the past. The past might not be as important as the future, but a buyer will always be interested in a solid growth both future and past. A business with a solid growth will always attract better multiples than a business which has just had one decent or good year. If you can show and prove good Return on the Investment, a higher value for your business is more easily achievable.
#5: Ensure you have a good team of staff.
Good staff that is loyal is hard to find these days. For an incomer that is very important to know that the business has good, loyal staff that will support the sale of the business and will stay on post sale. This could also be an opportunity to look at the EOT (Employee Ownership Trust) as this is the new way of buying a business today. The owner gets bought out at a good market related price and the staff become the majority shareholders of the business. There are 3 major benefit to selling into the EOT and they are:
- You as the owner of the business get your purchase price tax free.
- It guarantees the future of your staff as this is all about creating sustainability.
- No fear that your company will be bought out, stripped of all your assets and your employees left without a job
#6: The right time is when you’re business is at it’s peak.
Ideally you want to be in a position of strength when selling your business but is there ever a perfect time to sell? Yes there is. This will play a major role when selling your business. Ensure your business is at its peak when selling so you don’t have to accept the first offer that comes in. The financials of your business will show that your business is at its peak and now is the time to look at getting out as now is the time you will make the most money out of the sale, cause it’s worth the most.
THAT’S THE RIGHT TIME TO SELL
