There is an art to selling a successful business, which goes beyond simply finding an enthusiastic buyer with the right offer at the perfect moment. Though good fortune will undoubtedly play a small role in any successful transition of ownership, you will soon realise that each of these factors can be planned for and worked towards.
Whether you are the sole proprietor of a modest high street shop, or the director of a multinational corporation, the same method will apply when it comes to selling your stake in a business. Follow the correct procedures, and you will walk away with a just repayment for your years of hard work, and your company will continue to thrive and grow without you.
Maximise Your Value
Having built a company up from nothing, very few entrepreneurs would be satisfied with walking away from their enterprise with anything other than a generous payout. To ensure the best deal on the table, it is important to first of all get your house in order. Every potential buyer will perform due diligence. Prepare for them.
Know your intellectual property. Your range of products and services, your patents, and your in-development products will all play a major part in the value that any interested party is going to make. Understand the product life cycle, and set realistic forecasts so that your numbers are realistic.
Never underestimate the value of cooperation over competition. It is fine to have a 51 per cent market share, but new buyers will be just as attracted by agreements of mutual understanding with other businesses in the industry, or further along the production and distribution chain. A favourable contract with an international retailer may be your greatest selling point.
Finally, create a business plan which projects your company’s operations into the future, long after your departure. Existing agreements and a robust strategy will be highly attractive to any potential buyer, especially if they are new to the industry.
With the business plan set, the next step should be simple: do not alter your course once you have started out on it, unless external factors make change unavoidable.
Any business plan which has been in place prior to the sale being initiated was the correct direction for the business at that time, and will not change simply because management-level personnel have left.
Similarly, a drastic change to the existing business plan may damage the confidence of both colleagues and potential buyers, who will question the new decisions and may suspect that alterations are being made to maximise the personal earnings of the outgoing owners.
Additionally, any time a business changes ownership, it will require both stability and certainty. Remaining on course and steady can afford new management the time to seize control of the business’s trajectory, whilst alleviating any doubts of colleagues and employees about their own futures during the changeover.
A sound advertising strategy is essential to generate the interest of competing bidders and securing favourable terms and an attractive price. Use all of the tools at your disposal: sound out figures within the industry, as well as using online tools to promote and market your company.
Look within your own market. Not only will buyers from within the industry understand the true value of your enterprise, but competitors will frequently bid higher. An increased market share is of greater value to your competitors than a first foothold is to a new entrant to the industry.
The basics are there. The important stages in selling a business are to set realistic expectations; to whip up interest and activity around the sale to create competing bids, and to maintain a strong and diligent working ethic and business plan throughout the transition. That way, you can ensure a fair return on your own years of hard work, and give the enterprise you helped to create the best possible chance of continuing long after you have moved on.
This article was contributed by BusinessesForSale.com, the market-leading directory of business opportunities from Dynamis, the online media group also behind FranchiseSales.com and PropertySales.com