Have you got a good reason to sell?

Selling a business that you’ve built up over years is never a decision to be taken lightly and it’s likely that many thoughts will be going through your mind as you weigh up the pros and cons. Making a rash decision . We’ve dealt with many businesses who have decided that it’s time to sell so over the next few weeks we’ll cover in detail some of the points that need to be considered.

Do you have a good reason to sell?

Very often there will be a very good financial reason to sell a business. It could be that the company has built up a lot of value and the directors (or one of the directors) decides they want to realise some of that value and convert it into cash. This is especially common where the directors are nearing a retirement age or have maybe had a change in family circumstances such as marriage or divorce. Everyone’s reasons are different but the prospect of a financial lump some can be quite compelling.

For others the reasons may be more personal. A falling out with other directors, or even the fact the business is failing and there’s a hope that someone else can make it work, they’re all valid reasons for wanting to sell, however each has its own problems and you’ll need to approach the sale through a fact-driven process and as much as possible, keep emotion out of it.

The most important thing to be aware of is that you must be totally honest with yourself and understand exactly why it is you want to sell. Prospective buyers (the best types, anyway) will know what to look out for and if there’s any sniff of a problem, they’ll notice.

For example, if the business totally depends on the current director or owner to run then they’ll know this straight away. A business must ideally run independently of the directors in order to be saleable. Sometimes the buyers may stipulate that a current owner stays on for a certain amount of time to ensure an efficient knowledge transfer and if your reason for leaving is emotional and you are intending to be out quickly, this could completely alter your plans. However for some, staying on and getting a salary after selling may be a relief.

Our advice?

Ensure you know exactly why you’re selling up. Be honest with yourself and understand the effect this may have on your business and any other directors. Make all of the reasons clear to any perspective buyers and above all, don’t hide anything that could affect the sale.