If you want to give yourself the best chance of maximising the amount of proceeds generated from the sale of your business, it is worth considering these 7 steps.
1. Start with the end in mind, what are you looking to achieve both personally and from the business when you finally exit. You need to consider tax planning and potential investments to fulfil your financial goals.
2. Business Valuation, obtain a market valuation for your business to determine how much your business is worth in its current state. A reputable Business Transfer Agent will be able to provide you with the latest market conditions and multiple potentials. Don’t assume your business will achieve 3-5 x multiples, mainly businesses that score highly against the 8 Key Value Drivers perform that well.
3. Ensure you protect the value drivers in your business. Maintain strong financial performance and reward and retain key staff who will be needed to provide business continuity upon a sale.
4. Sell the business to family members or the current employees / management team. They understand the business dynamic and culture.
5. Sell the business to an external party. This may be a competitor, a private equity investor or even one of your customers. A solid marketing plan needs to be developed to increase the likelihood of a successful sale.
6. When assessing the business for sale, the prospective purchaser will want to ensure it will continue seamlessly upon purchase. You therefore need to ensure you have business continuity plans developed, what would happen in the event of key staff leaving or a system failure?
7. As it is so important, we mention it twice - Financial planning is key to ensure you plan taxes upon the sale of your business, ultimately you want to leave with the most amount of cash in your pocket.
If you would like to learn more about Business Exit Planning email firstname.lastname@example.org or call us on 07980 915676.
To understand how your business scores against the 8 Key Value Drivers, click here to take our free 13 minute survey and instantly recieve your Value Builder Score.