The Brexit negotiations have been impacting the way we make business decisions for far longer than we could have anticipated. However, despite the length of the process and the unknowns that surround it, there are things that you can keep in mind that will steady you through selling your business no matter the uncertainties.
Why are you selling?
The decision to sell your business will probably be one that has been made regardless of the Brexit negotiation.
According to Zach Dogar, a broker at ETSC, “In the last few years, the UK economy has grown slowly, and this has been good for business sales because trade Buyers want to acquire to increase revenues and profits. For most Sellers, business sales are mainly driven by an absence of succession, whether to family or management, and this has led to an active Buyer and Seller market.”
If you are looking to sell your small business, there will be other factors at play that will be the deciding factor as to when and why you are selling your business. This should remain the focus of the sale.
Is now a good time to sell?
When it comes to selling your business there will never be the perfect time. Trying to decide, however, if it is at least a good time can be a difficult prospect. There are a lot of factors that need to be taken into account and trying to get to grips with global and local markets can be incredibly overwhelming.
If you have been reading the news, you may be confused whether you should proceed with selling your business now or whether you should hang on for a few years before putting it on the market.
Fortunately for your small business, as long as you have been preparing over the preceding years, you should be able to go ahead with your sale.
The recent political and economic uncertainty have, in fact, created the ideal environment for you to sell your business. There will be a lot of people looking to put money into solid investments and your business, if you have prepared it for sale, could be the perfect option.
This will mean that you need to put in a great deal of effort into the due diligence of your business. Get ahead of any red flags that a buyer might see and resolve any potential issues before buyers are put off by them. Your business should come across to buyers as a solid investment.
The value of your business
One of the main concerns for many business owners that are looking to sell will be the effect that Brexit is going to have on the price that they can get. How will the value of your business be affected?
Dogar points out, "In general, the referendum outcome has hurt company valuations, but the extent of this impact very much depends on the business and, in the longer-term, the ultimate Brexit scenario play-out.”
Sooner rather than later
If selling your business has been on your radar for some time, you should look at trying to find a buyer now.
“For business owners, there is an unpredictable period ahead and some ‘rough weather’ to endure. Things will improve in the longer term, but businesses will struggle to maintain past profits as Brexit unravels,” says Dogar.
“If you are thinking of selling, then now is the time to try and find a Buyer, especially if your business is profitable. The real impact of Brexit on your business will be apparent after next year’s financial figures. You can still achieve a reasonable sale price, and the market remains buoyant.”
Small businesses have already seen major changes with new regulations like GDPR and the instability of Brexit combined with nervousness over Trump’s trade war with China. The next 12 months, however, will be vital to the future of the small businesses in the UK but, small businesses are resilient, and most will, inevitably, see financial growth over the next five years.
This is great news for potential buyers of your business as they can step in with fresh eyes and brand-new passion to take the business in this direction. For you, though, if you have had your mind on selling, you may well be ready to let this fight be someone else’s.
Rather, you can sell up and reap the rewards of the years that you put in to building a steadfast enterprise that is able to demonstrate its ability to show a positive trajectory over a number of years.
The selling process takes time
Something that you need to keep in mind is the fact that the selling process is not a quick one. No matter what is happening on the political scene, you will be involved in planning for the sale for months and even years before finally walking away.
Dogar suggests, “As more and more successful deals involve an Owner staying on in the business post-sale for up to 3 years, it’s sensible to start planning now."
You cannot foresee what will happen during the time that you start thinking about selling to the time that you handover the keys. You will need to make the decision to sell and then stick to it if you want to sell your business successfully.
The strength of your business
Despite anything that happens in the markets or in politics, if your small business is tried and tested, there will always be demand for it. There have been an increasing number of business buyers registered in the UK even after the referendum and the confidence in this portion of the economy is still strong.
If you have a solid business, you will always be able to find investors that want to invest in it. There could be a period of adjustment after Brexit where your valuation may take a knock but this will not be a long term change and you will soon be able to get things back to where they were before.
Keep focused on the day to day running of your business and make sure that you are growing it and that this is reflected in the financials and you will have nothing to worry about.
You’re emotionally ready
Having run a business for a number of years, you may not be ready to deal with the uncertainties that Brexit and the global market are throwing at you anymore.
Steering a business through economic ups and downs are part of being your own boss but this may not be something you feel equipped to do anymore. If that’s the case, it may be the perfect time to sell your business and move onto the next venture.
Having weathered previous storms, you will also have made various adjustments to your business. After the 2008 financial crisis, many businesses were forced to streamline their operations, this means that you are primed to get a great deal for a well-adjusted business that is set for success in the coming years.
Feeling ready to sell is one of the most important factors determining when the right time to sell is. Usually, if you have been running a small business for a number of years and you have been preparing for the sale, then you will not be massively moved off course by fluctuations in the market.