How to Sell a Business

Selling a Business Guide Image

With the outlook for the UK economy looking extremely positive, now is the perfect time to sell your business. Business owners, like homeowners, should look to sell at the height of the market as the valuation of their business is at its maximum.

At Intelligent we have seen the sale value of businesses increase by 4.8% in the past year. The healthy selling climate looks set to continue with the experts predicting that the UK will be the fastest growing advanced economy in 2017.

Here are the five main reasons to sell in 2017:

1. Entrepreneur relief tax - for now

Business owners selling their business can claim Entrepreneurs’ Relief Tax when selling all or part of their business, with owners paying just 10% capital gains tax. This is instead of the normal rate of 18% or 28% - representing a huge saving when you’re looking to maximise the return on your effort.

This won’t be the case forever though; reports are circulating that the government could make changes to Entrepreneurs’ Relief Tax, with the possibility of it being scrapped altogether. Owners looking to take advantage of the reduced fees and increased profit should act sooner rather than later.

2. Record-low interest rates

With UK interest rates holding at an all-time low of 0.25%, buyers’ access to affordable finance is at an all-time low as well. The market is flooded with buyers looking to take advantage of the accessibility to finance, and buy businesses just like yours.

At the same time as interest rates are coming down, consumer spending has grown at its strongest rate in four years to boost consumption. The economy is on the rise with access to buyer finance at an all-time high – the perfect recipe for a seller’s market.

This won’t last though. Interest rates are expected to rise considerably in the next 12 months, making it more expensive for buyers to buy businesses. The more expensive it is for buyers to take out a loan on buying a business, the less likely you are to achieve your maximum business valuation – meaning the clock is ticking on achieving your maximum business value.

3. More buyers in the market = increased sale valuation

With access to finance remaining at record high, this ensures that there are more buyers in the market. This in turn will push up the valuation of your business, as there is simply more demand for successful businesses.

While small business owners may struggle to access finance to grow their own business, banks always look more favourably on loans for business acquisitions. Banks consider loans for acquisitions as a more secure investment due to the trading history of your business. Between 50% and 60% of all business buyers borrow money from a bank to finance the purchase of a business.

4. More corporate buyers looking to acquire prime high street locations

We have also witnessed a rise in the number of corporations looking to acquire smaller businesses. As competition for prime retail locations increases, especially in the convenience and licensed industries, more corporations are looking to expand their portfolio by acquiring small businesses. The access to finance at low interest rates also increases the amount of money that these types of businesses can access for acquisitions.

5. You’ve survived hard times & profited

If you’ve been operating for at least three years, you will have successfully navigated and survived the recession years, which proved to be some of the hardest years small businesses have seen in the UK. Many business owners will see this is a massive plus and the right buyer will be able to see the opportunity that your business will provide in a growing economy.

How to capitalise on the favourable selling conditions

With the majority of business transfers taking anywhere from 3 to 12 months, now is the perfect time to get your business on the market and capitalise on the availability of buyer capital. Book your free business valuation, find out more details on selling a business or call our office on 0800 612 7718.