If you’re considering selling your business – or just want to make sure it’s in great shape for a valuation – you’ll benefit from a little forward planning.
In fact, unless your hand is forced by circumstance, it’s wise to devote as much time as possible to boosting the value of your business before you get busy looking for a buyer. A bit of spadework here will pay dividends a few months down the line when you’re setting your asking price.
Any buyer or investor worth their salt will want to scrutinise your paperwork – accounts, policies, staff and client contracts, for instance. So, allocate some time to ensuring that your admin is up to date. Not only will this reassure prospects that tax records, leases and liabilities are in hand but will also showcase operational efficiency. In particular, accurate financial information will enable purchasers to quickly assess current and predicted performance.
Often, when business owners start thinking about an exit strategy, they begin to ease up on business development, figuring that a new buyer will want to apply their own strategies. If you want to maximise the value of your business, however, it’s wise to take a more proactive approach, looking for ways to consolidate existing income and creating a blueprint for growth that could tempt investors looking for easy wins.
While it makes sense to add value by opening up new business opportunities, the value of any business lies primarily in the delicate balance between profitability and risk. Buyers will be drawn by solid financial performance, but they’ll be reassured – or repelled – by how you handle liabilities. You can reduce risk by settling debts promptly, optimising operational costs and confirming contracts and supplier arrangements.
If you are too involved in the day-to-day management of your business, you might actually be diminishing its value in the eyes of a buyer. It’s worth interrogating your