If you are selling a business, your main aim is profit. You want to make as much money as you can from the sale. Which means getting your business in tip top condition before you sell. The following guide will help you cover off the crucial areas and make sure your business value is healthy and attractive and a great buy for a purchaser.
Allow enough time and planning
It can take around 12 months to get a business fully sale ready. It can be arranged in a shorter time but you risk missing important details and having all necessary documents and information in place.
Finances and tax
Assess financial books and consider creating audited financial statements and revenue projections. Make sure your business value is transparent, recorded and written in black and white. Get tax advice early on from your accountant.
Stock, debtors and suppliers
Tighten up these areas to minimise extraneous stock and lingering debtors. A potential buyer sees business value in a lean and efficient cost operation. It is also a good idea to review all supplier contracts and eliminate any that might cause problems. For long term supplier contracts that you know are of great business value, ensure that contracts and negotiations are up to date. This should also include a review of all equipment and other material leases.
Assets
Offload assets that will be of little business value to a buyer. These can include fixed assets (that do not contribute to profit) and real estate assets (that can add complications to your financial records). On the other hand, if you have neglected investing in key assets such as
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computer upgrades or OH&S approved equipment, do this well in advance of your sale.
Systems and procedures
Document all of your company systems and procedures. It may be worth having a Policy and Procedures manual professionally prepared. Take care to document all of the ‘invisible’ and intuitive processes that only you or key staff know about.
Premises
If your business is location dependent (e.g. retail, loyal customer base), make sure the lease is locked in and secure. If the business value is not location dependent (e.g. wholesale) and is potentially in an area that may discourage buyers, consider relocating if you have the time and resources.
Staff and operations
Make sure you are not indispensable. A new buyer wants to see the real potential of running the business without you. Similarly, while staff are valuable assets (and a new owner might be counting on their expertise), you cannot guarantee continuity, so your operations manuals must be accurate and up to date.
Don’t forget to inform your staff in a timely fashion. You have a right to confidentiality but loyal staff also have a right to be treated with respect. You don’t want them finding out about the sale from another source.
Customers and clients
Try and avoid passing difficult customers onto a new owner. Similarly, don’t leave your customers in the lurch. Document any special arrangements or long standing deals. Inform key customers in advance and assure them as much as possible of continued quality of service. Ongoing business value depends on the good will of your customers.
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