Preparing Your Business For a Sale in 5 Steps

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Preparing Your Business For a Sale in 5 Steps

When you’ve made the decision to sell your business, it’s all too tempting to start to wind down and take your foot off the metaphorical pedal.

Trust us when we say, however:

This is the last thing you should be doing!

To make your business as valuable as possible – and get the most return on your investment – you’ll need to ramp up the hard work.

But the question we often receive is:

"How do you prepare your business for a sale?"

This guide will take you through 5 of the more important steps you have to take before you can successfully and effectively put your business on the market.

Take the time now to look at what you need to cover so you can achieve the highest sale value possible later.

1. Think like a buyer would

If you were to buy a new business, what would be some of the aspects of a business you would absolutely triple check before signing a contract?

Those aspects are the things you're going to have to highlight for your potential buyers.

This might require you to get paperwork and documents ready so you have them to hand for potential buyers.

You will also need to ensure the business operates efficiently throughout the process, since you need to prove to interested parties that the business is a well-oiled machine that can run even without you at the helm.

Take time to compile accurate financial information to show buyers how your business has been performing. 

While you’ll be rightly proud of your brand, staff and track record, your buyer will have a keen eye on future prospects and will part with more cash if they have evidence of a recurring revenue stream or ongoing customer contracts.

Spend time developing this area and you’ll reap the benefits in your sale price.

woman with laptop on sofa holding credit card

woman with glasses browsing through yellow folder

2. Do your homework

Prospective purchasers will want to see that all your paperwork is in order.

This makes sense, right?

But there's more to it than you might think:

Apart from satisfying them that your tax records, leases, contracts and articles of incorporation are ship-shape, having everything at the ready when asked for also reflects well on the efficiency of your business operations.

If a business owner can show due diligence, they’re much more likely to appeal to a buyer who wants to do things by the book, and it provides reassurance at exactly the right time.

This is important:

Make sure your company accounts are up to date and that operational manuals and HR policies are current.

3. Spend to earn

If you think there may be some areas for improvement in your business, consider taking care of them before you market it for sale.

It may seem counter-intuitive to splash the cash on upgrading your computer systems, but consider this:

Updating your premises or upshifting your marketing efforts but a modest spend at this stage may seem like a wise investment if it gets you a better sale price – and keener buyers.

Set aside some time and effort to get every aspect of your business in good order and it could pay off handsomely when you come to sell.

person inserting coin into black piggy bank with coins scattered around

two men at table discussing

4. Keep your sale as quiet as possible

Only share your sale plans with key stakeholders in your business, and even then only when necessary. 

This might confuse you at first, but let's think about this:

How would you react if the business you were working for suddenly announced a change in management and ownership?

Chances are you might be perfectly alright with the change, but there is also a group of people for whom this period of change might create anxiety about their job security.

You could consider sharing your sale plans with your key staff and external consultants, but only if they agree to sign a non disclosure or confidentiality agreement.

If word of your sale was to get out then you could jeopardise the sale value of your business.

5. Get your staff on side

If you employ staff and feel they’re a real asset to the business, your prospective purchaser will think so, too.

Naturally, your employees aren’t tied to the company indefinitely but if a buyer can see they’re committed, happy and valued, they’ll not only add value to your proposition, but will make the transition easier, too.

On the other hand, a business that’s too reliant on its owner will put off buyers as they fear a business will suffer if its lynchpin leaves.

Make it clear that the business can operate without your attention and empower your management team to lead in your absence.

four people giving a group fist bump in greenhouse

We hope that our guide has given you a better understanding of the things that come into play once you've decided to sell your business on.

If you’re considering selling your business, we can help you arrange a free valuation, or help you find more information on selling a business.

For more insights and guides, please visit our Knowledge Hub.

Or sign up to our mailing list below and receive new guides and insights directly in your inbox.

We hope that our guide has given you a better understanding of the things that come into play once you've decided to sell your business on.

If you’re considering selling your business, we can help you can get a FREE & instant business valuation below or help you find more information on selling a business.

For more insights and guides, please visit our Knowledge Hub.

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