23/11/2010

By Guy Rigby, Head of Entrepreneurs at Smith & Williamson


The challenge:

To maximise value from the sale of your business, whilst managing a smooth and timely process.


The solutions:

Prepare your business for sale

Reduce owner dependency and strengthen the management team, if necessary

• Ensure all relevant paperwork such as statutory books, leases and employment contracts are up to date

• Prepare an integrated financial forecast (including key assumptions, balance sheet, profit & loss and cash flow statements) for the next three years

• Reduce unnecessary spending but ensure that appropriate investment is made to support forecast growth

• Identify one off items that affect profits, eg. unusual bonuses


Use a third party to manage the sale process

• Agree a strategy for sale, including who to approach, when to approach and how to approach

• Agree a base line price with your adviser

• Make sure they are incentivised to maximise value, manage the process and focus on key issues

• Use them to negotiate, acting as a buffer between the parties

• Be prepared to step in if there is a deadlock, but consult your adviser first!


Understand what is important to you

• Price

• Business continuity

• A clean exit

• Paying less tax


Marketing the business

• Be realistic about the strengths and weaknesses of your business

• Consider whether your management team may be appropriate purchasers of the business and can attract appropriate funding (MBO)

• Keep your eyes and ears open for potential third party approaches

• The best buyer is often the one you want to sell to the least as they may have the most to gain from the sale


If you’re thinking of selling your business, contact Guy Rigby on 020 7131 8213, email guy.rigby@smith.williamson.co.uk or register here to arrange a complimentary corporate finance surgery to assess and discuss your options.

The information above is part of the Entrepreneurs' Toolkit series, produced by Smith & Williamson. More information on this and other toolkit topics is available at www.smith.williamson.co.uk/entrepreneurs/toolkit


Watch a video of Guy Rigby, Head of Entrepreneurs at Smith & Williamson, giving advice on how to manage cash flow.

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