Getting your business into good shape for a profitable sale is, in my experience, the best use of a business advisor and their skill set.
Having worked with a large number or ‘turnaround’ clients and those facing a ‘fire sale’ there are some simple, often hard, hugely important steps to take to get ‘sale ready’ and get the best return you can.
It’s no different to waiting the walls of your home, getting the car valeted and the service history up to date. You’re going to need to work hard at presenting the business in its best possible light and demonstrate the value and potential that you have worked hard to create.
Once you’ve made the call and shift in mindset, it’s a good idea to get an impartial expert opinion from a business advisor.
Get into the best shape you possibly can, with great systems and records and a clear potential future for adding value.
Sale? We’ve got a system for that…..
From the first employee onwards, having business systems is a crucial component of a successful, growth capable business. It’s also a significant hurdle for most business owners, mainly because ‘well, we’re getting by without them aren’t we….’
Having the process driven by an external advisor but resourced by your team creates a wide ranging process of evaluating what it is you do, how and why you do it, improving it and recording it in a format that others can follow.
And it helps you to achieve a sale and add value.
There are many ways to exit your business.
With the number of new start ups (nearly 19,000 in Birmingham in 2015) and the predicted failure rate of at least 50%, the majority of business owners will exit their business via liquidation (either imposed or voluntary).
Pre-empting this scenario by planning for your exit by way of a sale will improve the likelihood that you can manage an exit that generates a positive financial result. There are copious possible it paths and I’ve covered them in this simple e-book.
There is a rule of thumb – it’s always worth what a buyer is prepared to pay.
That’s not exactly helpful but it does place the emphasis on working hard at presenting your business in the best light possible. How the business is then valued (often by accountants or business valuers) may be a multiplier of its profitability (less reliance upon the owner in the running of the business can increase the multiplier value) plus assets ; a valuation based on the share value or often a valuation based on it’s future potential performance (a discounted cash flow forecast).
It’s a case of finding a balance between what you want/need to realise and being able to meet the market.
The range of resources available to clients looking to exit their businesses is currently being developed to include the following;
- A simple multiplier spreadsheet to give you an idea of the value.
- An e-book on the various paths to exit.
- The ‘How ready am I’ pre-sale check sheet.
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