Eight steps to a successful exit: how to sell your business

  • 15 Mar 2017

Risk takers by nature, entrepreneurs are often unhesitant to start a business when they’ve alighted on a great business idea and the timing feels right. 

But when it comes to deciding when and how to sell that business several years later, they’re often curiously racked with indecision.

Are you contemplating putting your business on the market? We’ve written a series of articles outlining the eight steps to selling a business, including tips and insights from business brokers – the estate agents of the business world – to help you decide whether and when to sell, and what’s in store throughout the process.

When is the right time to put your business on the market?

Step one explores the personal and business motivations that trigger a decision to sell, before looking at the pros and cons of timing strategies. From selling with your fortunes on the rise to seeking buyers when your business is struggling, this article will get you thinking about the factors that should drive your decision to sell under your own, unique circumstances.

Choosing the right business transfer agent

In this article, we discuss the pivotal role a good business transfer agent (also called a broker) plays in the selling process, helping you with paperwork, valuing the business, finding buyers, conducting negotiations, and more besides. We’ve enlisted some highly reputable agents to advise you on what you can expect from a trustworthy, competent broker and highlighted examples of suspicious sales patter that should set alarm bells ringing.

Preparing your business for sale

This is the central plank of your exit strategy. Is your business ready to be exposed to the harsh light shined upon it during the due diligence process? What condition are your premises and your books and records in? Can you produce key documents, all tidy and up to date, at a moment’s notice? Step three helps you make the business as appealing to prospective buyers as possible before putting it on the market.

How to value your business

There’s a saying that ‘valuing a business is an art and not a science,’” Gareth Smyth, group managing director at commercial real estate agency Hilton Smythe, tells us at the start of step four. Several business valuation methods are outlined in this article, which also explains why assistance from a broker well versed in the art of business valuation is indispensable.

Avoiding day to day disruption and the confidentiality conundrum

Finding your ideal buyer can be a tall order. This article considers the tension between advertising your business widely enough, and with enough persuasive information disclosed, and the need to maintain confidentiality for as long as possible. The motives of strategic and financial buyers are also compared alongside a revealing summary of the priorities of the typical buyer. 

Finding buyers

A pre-sale interlude can damage your sale prospects – that’s why experts recommend using an intermediary to relieve you of administrative pressures generated by the sales process. This allows you to focus on what you do best: running the business. Brokers also share their advice on when and how to disclose sensitive information to serious buyers. 

Why deals break down and how to close the deal

The sales process can last several months, so you should do everything in your power to reduce the risk of negotiations collapsing, sending you back to square one. This article explores the top three reasons why deals break down and reveals some tips from a serial business seller on how to keep negotiations on course. 

Finance and deal structure

There are many moving parts involved” when structuring a business sale, says Dan Barrett, director of corporate debt advisory at boutique corporate finance firm CreditSquare. The final step in our selling a business series compares asset sale and share sale models, and discusses warranties, loan notes and the importance of being flexible – which may include helping the buyer even after handing over the keys to their new premises.

These guides will hopefully give you an idea of what’s involved when selling a business, as well as reassuring you that the process needn’t be an intolerable chore – providing you follow best practice.

But don’t rely solely on our advice; the help of an experienced broker/agent – as outlined in step two – is invaluable too, as is advice from entrepreneurs who have been through the process themselves. Good luck! 

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