Question 1

When is the right time to sell my business?

Accepted Answer

There are many answers to this question, perhaps you should consider starting the process 2 or 3 years before you plan and intend to retire. If you are no longer motivated by the business or have taken things as far as you can, you should consider starting the sale process immediately.

Question 2

How much is my business worth?

Accepted Answer

It all depends on who you are talking too? A business is worth what a buyer is prepared to pay, however what they are prepared to pay is directly linked to the greater business opportunity they see with your business. No two offers from buyers are ever the same so you must put in the energy and time to talk to as many potential buyers as possible.

Question 3

How long will it take to sell my business?

Accepted Answer

Probably 12 months, you may be lucky and find the right buyer sooner, however do not be disappointed if it takes longer than 12 months. If you allow enough time and manage your exit you will be successful. The sooner you start the process the better the end result. Remember you may be expected to provide an extended 'handover' after the sale to the new buyer so factor this into your plans.

Question 4

Who will buy my business?

Accepted Answer

Depends very much on the size of the business. Smaller businesses are likely to be purchased by first time entrepreneurs. employees, family or a small trade buyer. Larger businesses will attract interest from larger trade buyers / Corporates in the UK and from overseas and Private Equity.

Question 5

Will my competitors buy my business?

Accepted Answer

In most cases they would love to buy your business, the problem is they are highly unlikely to pay you a premium for your business. This is because they already know your business sector and simply will not associate as much value to your business as an alternative buyer looking to enter your market sector.

Question 6

What does a business broker do?

Accepted Answer

In a nutshell, the right business broker can secure you the very best deal for your business while you continue to run the business. They will guide and assist you from day one, right through to your business sale completion. They will find the buyer, deal with any time wasters and keep the sale confidential while extensively supporting you through the negotiation stages.

Question 7

Can I sell without a business broker?

Accepted Answer

Yes, many business owners sell without a broker, however the process will take up much time and money if you want to get it right. It is important to remember you only sell your business once and there are no short cuts or quick fixes. The DIY seller does not have the experience, knowledge, contacts or deal comparables. An experienced business broker is far more likely to secure you a premium deal.

Question 8

How can I find a good business broker?

Accepted Answer

As in all markets, there will be both good and bad operators. When selecting your business broker or any professional who will represent you and your business, you must ensure you meet the professional who will represent and act for you. Many broker firms will send out a sales person who you will never see or speak to again after you have signed on the dotted line. Make sure you know who will be ultimately responsible for your business sale and make sure you trust, like and respect them. Talk to them about your business sale expectations and ask direct questions about how they will add value to you sale process. It is recommended that you talk to no less than three brokers before making your decision.

Question 9

How should I negotiate my business sale?

Accepted Answer

Always negotiate from a position of strength. When selling any business, you want two or more qualified and strategic buyers at the table, all of which are motivated to win and acquire your business. If you create competitive tension between multiple buyers, your final negotiation will be successful.

Question 10

What should a Sale Memorandum look like?

Accepted Answer

A professionally prepared document that explains the company history, a summary of financial performance and an indication of the future business opportunity. Enough content to encourage an interested buyer to want more and meet you the business owner. This document is normally complemented with a Confidential Business Summary which is used to generate buyer interest.

Question 11

Do I need to use confidentiality agreements?

Accepted Answer

Yes is the simple answer. Never provide any confidential business information to a potential buyer before they agree and sign your non disclosure agreement (NDA). It's just not worth the risk and it is the first step in qualifying if they are a serious buyer or if they are just fishing for information about your business.

Question 12

Who are the best business buyers?

Accepted Answer

You should look for a strategic buyer who wants to invest in your business and staff to grow the business to the next level. Try to avoid the financial buyers who are motivated by the reduction of costs by merging together two businesses.

Question 13

What puts a business buyer off?

Accepted Answer

There is a long list...The main items include: A lack of management information. Business is too reliant on the business owner or a single client. No business protection or low barriers to entry. A history of loss making or poorly presented sale memorandum. A vendor trying to sell without professional help.