Preparing your Business For Sale

Whilst not strictly a blog post this is always useful information and worth repeating.

1.  Start early - get organised
Whatever your business, when you go to market, you need to be well prepared.  Ideally make a start at least 1-2 years before you plan to sell.
However if you have a small or micro business it may be that you simply need to get organised and make a few tweaks.  
2. Collate and organise your financial data
Firstly, ensure you have at least 3 years full financial statements published and ready.  In particular you should have the latest full financial year finalised e.g we are now in November 2024, if your year-ends 30th June you should have the 30/6/24 Full Financial Statements completed.
3. Get to know your management accounting system.
Since the introduction of Making Tax Digital (MTD), nearly all businesses use an approved management accounting software service.  Whether you use Sage, Quickbooks, Xero or another system, become familiar with it.  Buyers are hungry for data and being able to produce timely mid-year information can be crucial to maintaining the interest of a keen acquirer.

    At this stage you may want to consider getting a business valuation.  Whilst you may not yet be ready for market,          the scrutiny of a professional valuation may give some valuable insight into the way forward.

4. Forecasts
If you have a forward order book, quantify it ready to present.  Alternatively (or additionally) have a forecast in mind for the next 1-2 financial years.   Whilst any forecasting is always open to question, it is better to have some idea of your business's future to discuss.
5. Business Plan and Documentation
Have your main business processes noted and documented.  Even the most modest enterprise has methods in place for marketing, sales, ordering, customer service, production.  At best this would be a detailed how-to manual, but even a few paragraphs can be an illuminating way to present your business well.
6. Premises
If you lease your business premises, have a copy of the lease and other details ready and updated.  Check for any pending rent reviews and any other clauses that may affect the business going forward.
7. Staff
Many (most?) small businesses have fully involved owners.  But staff are also a key asset in any sale.  Be honest.  Could you be easily replaced, or are there any staff who could step into a management role?  Having a full-time hands-on working owner doesn't make your business unsaleable but it is important to know the structure and identify how a buyer may consider a replacement. 
8. Keep running the business effectively
Don't take your eye off the ball.  So many businesses suffer a drop in performance in the year they go on sale.  This reduces the value.  Keep working hard to maintain and improve your business.
9. Valuation
Be realistic.  Try to get 3 or more valuations.  By all means use an online valuation tool or even AI, but in my experience these tend to overvalue.  They do however, take you through the valuation process and help you to focus on the information required.  Accountants tend to be poor at business valuations.  A professional business broker will take time to collate your business data and analyse it in line with their experience and market conditions.

For a discussion about your business sale or valuation, please get in touch.