…to lay good foundations.
Making sure your company is marketable takes skill, attention to detail and good advice. As with any commodity, the key is to ensure you have an attractive proposition for potential buyers.
It is surprising how many fledgling sales fail through, due to a combination of poor planning and ill-judged management decisions. It is, therefore, essential that preparation starts well in advance of any negotiations.
A number of different types of business sale are available, including:
- Trade sale
- Management buyout (MBO)
- Private equity buy in or buyout
No matter which of these you choose, there are four stages to the sale process, namely preparation, market testing, negotiation and completion.
Preparation should start ideally a year before the anticipated transaction. As the business owner, you will need to ensure a strong management team is in place to continue day to day operations and once the objectives of the company have been clearly defined, it should be easier to work out a timeframe for the sale process.
Market testing involves researching potential purchasers and making initial approaches that may pay off in the long run. It also involves understanding where your business fits into its sector and how it compares with competitors. You will then need to determine how it is performing in relation to your rivals and understand the overall economic landscape, to ensure conditions are right for you to sell.
The next step is negotiation, which involves a detailed evaluation of interest, receiving offers, bargaining and reaching an agreement in principle. Finally, completion is reached once contracts have been drafted, the finances agreed, due diligence carried out and contracts signed.
Another aspect to selling a business is considering how it will affect your staff. Before making your intentions public, it is best to check if there are any deficiencies in your contracts of employment relating to the documentation and arrangements you have in place for protecting confidential information and relationships.
Lastly, you will need to decide if you wish to sell your shares in the business and/or its assets, as this will impact on the amount of tax you pay after the sale has completed.
To find out more about selling your company or how to get it in good shape for maximum value, always employ professional advisors. We can handle the transaction, leaving you to concentrate on running the business.
Speak to our specialist corporate solicitor, Rob Moore, for more information on (0114) 218 4000 or follow us on Twitter, @tayloremmet.