Is Your Business Fit For Sale?
Advice to business owners is always – plan your exit from the business well in advance. Groom the business to maximise its saleability. Choose the timing with care.
Unfortunately, while most people accept the sense of this, in practice it usually doesn’t happen, often because the decision to sell is made quite suddenly and once it is made there is a desire to sell as soon as possible. This means that the majority of businesses are ill prepared for sale. In these circumstances it is fair to say “sell and be prepared to be disappointed or ‘prepare’ to sell and realise potential”.
There may now be an opportunity arising from the current economic situation.
Trading conditions for many businesses are somewhat tougher than they used to be and no-one is able to forecast when easier times will return. Many business owners may therefore have decided to put thoughts of selling onto the back burner for a while. For them this is therefore the chance to turn a set-back into an opportunity.
Beardsley Theobalds has always been an advocate of planning the sale of a business and, where appropriate, has been active in offering specific advice to enhance a business’s saleability and value. However, a few years ago we took an important step further.
A joint initiative was established between Beardsley Theobalds and a very experienced and successful businessman, Colin Spencer Halsey, who has spent many years working in the area of business development and exit strategy. A ‘cradle to grave’ service is offered, under the name Beardsley Confidential Portfolio, to guide business owners through the development of a plan and objectives, the actual development of the business, the marketing of the business for sale and the negotiations to result, hopefully, in a really successful sale.
The process starts with an audit of the business in order to produce a diagnostic analysis of where the business is currently and this is followed by discussion, agreement and plan to get it to where it needs to be when offered for sale. Of course, the exit strategy may not be centred on a sale on the open market, it could result in a private or trade sale or in the possibility of a management buy-out or that the baton is handed on to a member of the family. Whatever the end-game scenario, the ‘journey’ is just the same. The business needs to be 'prepared’ for transfer into new ownership.
The plan includes the production of a Due Diligence File – a document of real value. The availability of such a document when the business is offered for sale will prove extremely beneficial as due diligence can be, and often is, something of a minefield and is extremely time consuming and costly if not collated.
Using a professional business model to help prepare for sale produces a business discipline and many benefits for the business owner – it sends a strong message of intent to buyers, strengthens their negotiating position, maximises potential, adds value, saves time and money during the selling process and very considerably reduces the potential for the purchaser to re-negotiate the price down!
Although Beardsley Confidential Portfolio provides ongoing practical help and support at the business coal-face during the grooming process, the business owner will, of course, need to obtain other qualified input in order to pull everything together and also help to strengthen the position through trade and legal business housekeeping. Such input is usually sourced from such as an accountant, tax advisor, lawyer, broker and possibly others who, together with the business owner and Colin Spencer Halsey, (who will co-ordinate the entire process), forms the Exit Team.
The initial discussion with Colin to assess the circumstances and objectives, both business and personal, to enable him to advise and perhaps agree new objectives with business owners, is free of charge and without obligation.
If you are thinking of selling your business in the near future, please note that grooming a business for sale usually takes anything from around 1 to 3 years (and, in certain circumstances, up to 5 years) - a meeting with Colin may prove to be one of the most valuable moves you could make. Colin can be contacted through Beardsley Theobalds on 01392 253071.
Roger Mundy, Managing Director, Beardsley Theobalds