Thinking of Selling Your Business?

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Three frequently asked questions by would-be business sellers are reviewed here. There are no definitive answers - just prompts and reminders to focus our minds.

Around the issue of value and pricing, how can I tell how much the business is worth?

The first simple answer is that the business is worth whatever someone is prepared to pay for it. While it is possible to commission a qualitative valuation as a guide, this may be of limited use only if, for example, the general economic climate and market conditions for the business are volatile. Clearly, a guide price which accurately reflects the value within realistic limits and can attract buyers will stimulate interest. In reality, the best price will be realised if the business is valued highly by two potential buyers in a competitive bidding situation.

Is there a best time to sell my business?

The best time to sell your business would be when it is performing well, in a market which is growing and developing, with you able to evidence and forecast a successful future performance. The worst time would be if the market was declining, your business suffering from a downturn or with fundamental performance and profitability problems.

The price you promote and eventually sell at will reflect the combination of internal business and external market climate conditions. You can be fairly certain that prospective buyers will do their homework before buying (due diligence etc). However, in the end, it would be best that you can choose when to sell rather than being forced by difficult circumstances to sell.

How do I find a buyer for my business?

Unless you have someone lined up to buy and you are choosing to sell, you are faced with promoting the sale of your business on an open business buying and selling market - as a commodity. The same as you would normally proactively promote your business and its products or services, you will need to do the same with the business itself.

There are two places to begin - firstly in the market place that you know - within your networks of suppliers, competitors and customers. At the same time, if you are going into the open business sales market then seek the advice of experts in that field, unless you are confident yourself. You will be looking to commission the promotion and sale of your business through an appropriate agency.

Here, in partnership, you would seek to combine your research and knowledge of your business sector and specific market situation, with the agencies understanding and skills in the business selling market.  

At Ellis & Co, we can help across a range of activities from first steps in preparing to sell your business, through to the sales processes and the mechanics of a sale with its implications regarding your sale income and tax liability.  For further information, contact Robert Ellis on 01244 343504.