Selling your business at the right time will earn you the biggest reward for your labours. Sell it at the wrong time and you could sell yourself short. Here’s when to spot when the time is right.

By Iain Paterson, a partner at Scott-Moncrieff

Should I prepare my company for sale? Yes, it shows the business in the best possible light and maximises the sale price.

When should I start?

This depends on the complexity of your business. The rule of thumb is you should start one to two years beforehand.

What do I need to consider?

• Is your business properly structured to minimise tax?
• Are there assets in the business which you do not want to sell, for example, property?
• Are the accounting and other controls robust?
• Are the employee contracts in order?
• Are the statutory books, records and company documentation up to date?
• What warranties am I likely to give?

When is the best time to sell?

Preferably after two years of good results.

How can I maximise the price?

Ensure there are no excessive provisions, avoid unnecessary expenditure in the run up to the sale and maximise sales.

Who is likely to buy my business?

The management team, a competitor, or someone looking to increase their share of the market, or make a start in your particular industry.

Will I be expected to work in the business after it is sold?

It is common for a purchaser to require the seller to work for a period alongside the new owner, particularly if the new owner has little experience in the particular business.

Is there anything else?

If there are doubts about future profits the purchaser may require an earn-out clause. And, of course, be sure to speak to an advisor who has the experience to guide you through the sale.

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By Iain Paterson  on   Jul 13,2008

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Keywords

business exit   cash exit      

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