Selling your business: How to ready your business for sale

If you are considering selling your business, have a read here.

Below are some simple and easily-executable steps that business sellers can take to get their business in its best possible shape for sale. 

Step 1: Ready the business for sale

Firstly, make sure that your business is ready to sell. Take a look at who the potential buyers may be and determine how you will come to a fair valuation of the business.

By doing this you can attain the best chance of selling your business and maximising its worth.

Most owners will begin the business review around three to six months before they decide to sell. Remember, the earlier you start, the greater time there is to capitalize on its worth.  

We recommend taking the following steps: 

Business review: Conduct a business review emphasising the strengths and minimising the weaknesses of your businesses.

Review things such as employee work and service development and work out whether these could be made more competitive. Is the business registered in the name of those who are selling it? If not this could impact on its sale value– as it’s the goodwill of the owner that will underpin a successful sale. 

Find a mentor: If you can, find an experienced business owner who can advise you on a monthly basis, then meet or speak to them as soon as you can. This kind of guidance on business direction will help you discover avenues not previously considered, and could help to maximize the price.

In ideal world this should start two or three years before putting the business up for sale, but this isn’t always realistic

Systems: try to identify whether there are any flaws or weaknesses in your business systems.

Systems could include work policies, manuals, even employee role descriptions, If there are weaknesses, then make some changes by drafting a plan to develop templates. Then these systems can reach a higher standard. 

Business profile: The profile of your business in the marketplace is of great importance. Take a detailed look at where your business profile can be strengthened and portray it in the best light for potential buyers. Also record this in a short profile document which you can provide on request. 

Set a business valuation and deal structures: The basis on which you value your business is essential to leveraging finance for it. Gen up on business valuation concepts and explore whether other deal structures and modelling could apply. Do you want to sell the entire business and have all of the shareholders agreed to what you want?

Draft a simple strategic plan: Potential buyers will want to know about the future of the business. Produce a document highlighting how the business could growth to help buyers see your vision.

Step 2: Find a buyer 

Prepare a memorandum: A memorandum document will encompass all of the work you have completed above. It should provide detail on your product categories and markets plus company financials. It also lists your intangible assets (such as goodwill and intellectual property). It will incorporate your business strengths and market opportunities. 

Marketing. Take a good look at your industry. Develop a broad marketing plan tailored to suit your business based on strategic investment considerations. There are different types of business buyers so any marketing campaign should be constructed around the type of buyers interested. 

Make direct contact with large companies that wish to acquire your company. Big corporation contacts and resources and business brokers will help a range of industries. The final campaign could include newspaper and magazine advertising, direct marketing to potential buyers and Internet advertising.

Negotiation: Once you find serious potential buyers you’ll need to negotiate with them to get the best deal by following a process like the one below:

Initiate contact with potential purchasers

Establish their trust and confidence in you and the business

Build rapport

Use negotiation tactics that enable you to maximize the price

Strategically examine potential buyers 

Determine how to sell your vision for the maximum price.

Agreement: After following this plan you should reach agreement with a buyer. Then draft an action timetable and complete the purchase. Selling your business has never been easier. 

Listen to "Go into business with a view to selling", a podcast interview with business broker Michael O' Connell of A.S. Fisher