Selling your business is often the pinnacle of your business venture. It may be the time to move onto a new venture or you have just had enough. This is always a major decision in your life and a challenging task to say the least. There are several legal and tax implications to look out for, so hereunder are some pointers on how to approach this.
What is the reason you now want to sell?
Whatever your reason always keep your focus on the end result. Getting ready for your exit early is important to reaching your end-result, a profitable sale. Remember a sale process is normally lengthy could take up to a year to get finalised if you are not ready.
An important part when selling your business is to make it as attractive for a potential buyer. Here are some tips on how to do that:
When selling a business for a profit you will need to pay capital gains tax once reached your tax-free allowance. The good news is that there are some tax reliefs that can help lower this expense
When to sell your business is crucial to get the best price.
You should consider selling when profits are high, when economic markets are expanding, etc. all this will be appealing to your buyer and will get you the best possible return.
A good time frame to plan and put your business on the marker is generally 2 years. This will allow you to get your accounts in order, get a good management team in place and train them and last but not least expand your customer base.
All of the above will assist in getting you the best return on your investment.
There are several ways to value a business so to get this right the first time get an expert in to value your business.
You may not be aware but on your net profit you may be able to add in director’s salaries, depreciation pension etc. this is called EBITDA. and that will all add to your business selling price
Be careful as some brokers will tell you all you want to hear just to get you on their books with a fat upfront fee to be never hear from them again.
Also be ready to negotiate with potential buyers as they will try to push your price down so have paperwork at hand proving what your business is worth.
You may want to get an I.M. done which outlines your business and its activities, location growth and future growth of the business reason for sale and turnover to name a few points.
Any buyer who is serious on buying a business will want to do a proper through due diligence to ensure that he is getting a good deal and, he is paying the right price.
It is always advisable to get a professional to assist you with this step.
Some hints to help you with this:
This is not an easy task, especially if you still running your business whilst trying to sell it. It can be very irritating to get several calls daily and now you need to filter out the good serious buyer from the tyre kicker.
We at Commercial Road are here to assist you with this process. We filter out the “good from the bad” and ensure that you are fully concentrated on running your business whilst we do the filtering for you and present you with only serious potential buyers. This will allow you to:
In some cases, even when the broker has negotiated a price when the buyer speaks to a seller he might want to negotiate a little further. Always make sure you have a bottom figure in mind, and you know that you will not sell lower than that figure.
It is our job to ensure that the buyer is good for the sale thus when he talks to you he has already been qualified and is good for the sale, now it is time to convince this buyer why he should buy your business.
A qualified solicitor usually takes over at this stage and completes the sale at this stage.
Here are some of the main agreements to look out for:
Before you start spending your money make sure you have paid all your taxes