1. Your valuation is unrealistic
Too much will put people off; too little will not achieve the result you have worked for. Be fair to yourself in all respects.
2. You’re not prepared to negotiate
A purchaser will want to pay as little as possible but you need to be fair to yourself. Have a range which is attractive to the purchaser and leaves you feeling satisfied.
3. You haven’t bothered with tax planning
You need to use tax planning to reduce the impact of capital allowance clawbacks and potential capital gains tax. By apportioning the price between, for instance F&F and Goodwill, it is possible to make the purchase price more attractive to your purchaser through immediate tax allowances, or less onerous to you through tax liability.
4. You’re very anxious to sell
While a purchaser will appreciate retirement sales and the like, they will expect a valid reason for selling an apparently profitable business.
5. You’ve hidden “nasties” in the figures
If there is bad news, a good accountant will find this and it is easier to be up front than to explain an adjustment when the sale is proceeding nicely.
6. You’re taking your foot off the gas
The business is not sold until the deal is signed. However tempting it may be to relax, a sudden fall in turnover provides an option to renegotiate price. Similarly staff need to remain motivated, since they will want to keep their jobs under the new owner.
7. You’re using unprofessional agents
If you use an agent, make sure they understand your business and are able to represent your interests.
8. Your legal advisers and accountants don’t know their stuff
Your advisers and accountants need to represent you and conclude the transaction for you quickly and efficiently, so more of the proceeds come to you than goes in fees or to the tax man.
9. Your purchaser is a time waster
Make sure you vet your prospective purchaser to ensure they have access up front to the money they are prepared to pay. However attractive that extra few thousand may be, it is better to have a solid purchaser with the funds than someone who still has to raise the capital.
10. Your premises are a mess
If the premises need work doing, it might be better to do this yourself or offer a discount on the price. Have your strategy clear.
Stephen Walklett is a director of McCarthy Taylor Consulting.
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