Getting Your Business Ready for Sale

If you are planning to sell your business, there are a number of actions you should take to get your business ready for sale. The current state of your business will determine
the length of time it will take to get your business into shape for sale. This article considers some of these key actions you should take to get your business ready for sale:

 

1. Focus on Growing the Profits of the Business

A business is typically valued based on a multiple of its maintainable earnings. You need to focus on growing your business’s profits in order to maximise the selling price.

You should consider focusing on your business’s key or high margin products and services and reducing or eliminating expenditure that doesn’t directly relate to the performance of the business.

 

Also ensure one-off or exceptional items are clearly identifiable so they can be excluded when evaluating the business’s financial performance.

 

2. Tidy up your Business Assets and Liabilities

In general purchasers are only interested in the assets and liabilities that are required to run the business.  Ideally any non-trading assets or liabilities should be removed from the business before the business is put up for sale. 

Likewise, legacy debt issues with creditors, banks or Revenue may act as a deterrent to purchasers so any such issues should be cleared up before putting the business up for sale.

 

3. Strengthen up your Management Team

A business with a strong management team is much more attractive to a potential purchaser than a business that relies greatly on the business owner.

You should look to develop a strong and competent team who are capable of running the business.

 

4. Review your Legal Contracts

A major concern for any potential purchaser is that key customers or suppliers will continue to trade with the business after the sale.  Likewise, the purchaser will be keen to ensure that key staff will remain working in the business.  

Therefore, you should review the contracts with these key customers and suppliers and employment contracts to ensure the terms and conditions will prevail following the sale of the business.

 

5. Improve the Business Systems, Processes and Controls

A potential purchaser will look more favourably on a business that has systems, processes and controls which enable the business to run smoothly and efficiently. 

Consider engaging with external consultants to review your business’s systems, processes and controls.  If improvements can be implemented in these areas prior to the sale it is likely that a better price will be achieved. 

 

6. Clean up the Business Assets / Premises

While the level of earnings may dictate the price a purchaser will offer, the physical state of the property and other assets could dissuade them from making an offer in the
first place.  

Consider repairing or replacing old plant and machinery, painting and cleaning up the premises before putting the business up for sale

 

Conclusion

As with most things in life preparation is the key to success.  Taking the time before your business is marketed for sale will reap rewards in the longer term.

If you have any questions on any of the above or need assistance with getting your business ready for sale then please do not hesitate to contact a member of our team.