What Do You Need to Think About When You Want to Sell Your Business?

There’s been a bit of a feeling for the last year that it’s not a good to time to be selling a business. That Covid-19 has created too much uncertainty, leaving investors twitchy. But while that might have been true in mid-2020, we’ve had a whole year of relative quiet on the business market. Investors are actively searching for acquisitions. And this is good news for sellers. But if you are on the point of putting your business up for sale, there are a few things you probably need to think about first.

Five Things to Consider When You Want to Sell Your Business

1. Do you really want to sell your business?

OK, so perhaps this is a bit of an obvious question. But it’s also kind of an important one. Not just because you really need to be certain before embarking on a business sale – in many cases, this is a project that will have consumed your heart and soul for years. But because any prospective buyers will need to know that you’re serious. And why you’re wanting to sell. So, take some time to think things through before you start working through the formalities.

2. Get to know your numbers

If you’re going to sell your business, you need to have realistic expectations. And part of that is fully understanding what you are offering to any potential buyers. While your niche and USP are important, the main value driver in any business transaction is cold hard cash.  Understanding the current turnover, profit, overheads, and all the other key aspects of your balance sheets, as well as realistic future predictions, will put you in a really good position to convince buyers that your business is a viable proposition.

3. Work on the status of your business

Most investors are looking for acquisitions with potential. A brand that has a solid reputation has greater kerb appeal. Because if a company doesn’t need to be ‘fixed up’ in order to turn a profit, it can return a far greater – and faster – ROI. So, while it’s tempting to let things slide once you’ve made the decision to sell, it’s more important than ever before to invest in your customers and the customer experience. You need to drive sales, cut overheads, improve service, enhance products. Because then, you’ll get what your company deserves when the sale takes place.

4. Do your own due diligence

No investor will ever take on a business without undertaking due diligence. This will reveal any potential issues with contracts, suppliers, employees, property and lease risks, and business policies, as well as financials. Carrying out your own due diligence before putting your business up for sale will not only prepare you for any problems that may impact the sale/sale price of your business but give you the chance to put corrective measures in place. 

5. Consider a business broker

Selling a business can actually be a full-time job. Trying to do it yourself while still managing the day-to-day administration of your company can be counter-productive, as well as exhausting. You have myriad things to take care of, from marketing and negotiating, to handling timewasters. A business broker can help you through every stage of the sales process, including helping you to assess the true value of your proposition. It takes the time and stress out of moving on.

As long as you are prepared, there is no right or wrong time to sell a business. There will be a market, you simply need to go out and find it.

If you’re looking for support selling your business, get in touch with Ventura Business Brokers.  

Everything You Need to Know Before Taking on a Business Broker

Selling your company is a big deal and it’s important to find the best business broker to help you achieve a sale. But how do you know that you’ve found the right broker for your needs?

Five Things You Need to Know Before Selecting a Business Broker

1. What is a business broker?

Business brokers work with business owners to facilitate the sale of their company. They work with a full range of business types – sole proprietorships, partnerships, PLCs, and limited liability companies. And there are different brokers for different business requirements. Business transfer agents (BTA), for example, generally specialise in helping smaller businesses. Whereas corporate finance firms (CF) typically deal with the middle market – enterprises valuing £5m or above. And commercial real estate agents (CRE) help businesses dispose of their premises, should they not wish to sell their company as a going concern.

2. How do business brokers work?

Every broker has their own approach to doing business. Usually, their sales rate comes down to how proactive they are in their approach to finding buyers. And how realistic their pricing is. Because although, as a business owner, you want the highest price possible for your company, it’s important to remember that an over-priced business never sells. Equally though, you don’t want to give your business away. So, you need to find a broker that can find that perfect, realistic, middle ground. And then put in the legwork to facilitate the sale.

3. Research and ask questions

Treat your initial contact with your broker as an interview, and have a raft of questions ready to go. Not just about fees. But about how the business valuation will be made, and who by. Whether you will have a dedicated account handler. What happens if a sale is not made? What happens next – and at every stage of the sales process – if you agree to take them on. And have they worked with any other businesses like yours in the past? What was their success rate?

4. Be aware of the small print when considering fees

Business brokers tend to fall under two different structures when it comes to fees. You can pay a retainer or you can work on a no-sale, no-fee basis. Whatever the agreement structure it’s important to understand all aspects of the deal before agreeing to proceed. At Ventura Business Brokers, we operate predominately on the basis of a ‘success fee’ and this will normally be based on the price achieved. In some circumstances, a modest initial fee may be payable but this will depend upon the amount of preparatory work and desk research we need to undertake prior to marketing.

5. Success is never guaranteed 

Even the very best brokers in the business will not be able to sell all the companies they take on. That’s often because the business is working with the wrong type of broker for their needs or partly because the business isn’t in a saleable condition. So, before taking on a broker, it’s a good idea to make sure your house in order. This article should help in that respect.

Finding the right business broker for your needs has the potential to significantly simplify the sale of your business. But the emphasis in that sentence is on ‘right’. So, take your time. Do research. Ask questions. You’ll be glad you did when you complete your sale at the best possible value.

 

Are you looking for a reliable business broker to work with? Get in touch to find out what Ventura Business Brokers can do for you.