The process of selling your business is often lengthy and can involve hidden hurdles, particularly when it comes to the ‘due diligence headache’.
Here are five key areas to help your business stand out as a company worth buying and not just one looking to be sold.
1. Do your research
We exist within a competitive and often volatile market, which can make the process of selling your business more difficult.
However, with the right kind of research, you can use this to your advantage: as with competition comes options. With a bit of digging you can find out the amount similar businesses have sold for and who was trying to buy them; buyers who missed out on rival companies could be the perfect fit for yours.
Research also helps to identify genuine prospects. Be wary of companies who approach you out of the blue with no previous connections. You could risk releasing confidential information, which could be used against you, despite a non-disclosure agreement.
2. Prepare your papers thoroughly
Due diligence has proven to be a silent monster for many unsuspecting first-time sellers.
The simplest way around this headache is to ensure your papers are in order from the very beginning. However, as a second best option, it is advisable to ensure they are all 100 per cent in order before you bring in the lawyers. Any discrepancies will be used against you during the negotiation phase – this can be as small as a historic trading dispute or disgruntled employee.
3. Don’t let money be your only guide
You started your company for personal and financial reasons so it‘s important to consider both factors during the selling process. A decent buyer will be interested in the soul of your business, including those who work for you, as well as your personal investment and passion in your company ethos and USP.
Never sell out of fear you won’t get a better option. By staying true to your ethics and looking after your employees you make your business a more attractive option for worthwhile investment.
Negotiating a deal isn’t just about selling a concept, it’s selling the whole mechanism of a company. If you prove to a potential buyer that your company operates smoothly, has growing power and loyal and happy employees, as well as a healthy client base, you will be providing a package that cannot be refused.
4. Be patient
The saying goes, ‘If something’s worth having, it’s worth waiting for’. It’s not a bad idea to have this permanently stamped on your person.
The selling process, whether it’s a merger or acquisition, takes time and a great deal of patience. If you rush the process you could risk seriously losing out, feeding your company to the fishes, or getting embroiled in a hefty lawsuit.
Several company owners have spent years carefully building their business just to throw it all away in a hasty decision. To avoid this take time to really think about your options, keeping the value of your business continuously in mind.
5. Don’t be afraid to seek external support
It is often easier for a third party expert to negotiate on your behalf. This can also preserve the integrity of your relationship with the other company’s management by preventing any nasty arguments that may arise.
The negotiation stage is stressful and even the most experienced sales people have said it’s a tricky wave to ride. Bringing in external support such as a finance director can make a huge difference to the success of your deal.
Sophie Turton is assistant web editor for Crunch, an online accountancy firm for small businesses, contractors and freelancers.
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