The right support for your exit

What you need to know!

The first thing you need to find out is whether your business is market ready and structured in a way to achieve a value that you will be happy with. Unfortunately this is not something that can be done on your own. If you were selling your own house, you would not conduct the valuation, the various surveys or the identify potential buyers - So why would you consider doing this for your business which hopefully is worth considerably more than your house? Breaking this down, the valuation should be conducted by a professional valuer, an M&A consultancy or a proactive broker. As above, using an Accountant (or even worse your Accountant) at this stage would be similar to using a Quantity Surveyor to do the Structural report on your property!

So what is Market Ready - You must be able to demonstrate that you have a plan for the future which shows growth or growth opportunities. This needs to be formally documented as a 5 or 3 years business plan, which includes the "how" this will be achieved i.e. a 1 year plan, strategic road map and ideally functional/departmental plans - The more detailed the better. Next you need a "how to" process map and guide to every function within the business - If it is not documented, it doesn't exist in the eyes of a potential buyer. Finally you need a comprehensive "organisational structure" with a competent SLT, role/remit descriptions and a succession plan for all key roles within the business - Any areas deemed to be single point failure or key inputs of the current owner that cannot be replicated, will hurt the value. At this point you need either a proactive M&A consultancy, a business consultant or someone who can affect real change, like a Certified Value Builder. A word of warning at this point - there is a massive difference between M&A advice and implementable inputs - A Value Builder will measure your current position, address key areas of the business, work with you to implement change, re-measure ensuring value has been added and eventually support you in identifying the correct route to sell your business.

Finally you need to know what type of buyer you wish to attract and what your motivation to sell is. There are 2 main types of buyer - Strategic and Financial (slightly over simplified). A Strategic buyer sees value to them (or their existing companies) in excess of the financial value. A financial buyer simply looks at the value based on the performance numbers and future opportunity. A strategic buyer will always pay more than a financial buyer, however this is a much smaller target market. If you want a Strategic buyer you will need to engage an M&A consultancy or a proactive Business Broker with a track record of identifying buyers within your sector. If you are looking at a financial buyer you need to work with someone who can give you an independent and realistic valuation, which you can either accept and engage a Broker or realise you can achieve a higher value through proactive change - in which case engage a Value Builder.

The reality of selling your business is that EVERY business is saleable at a price - Unless you actively improve all the areas above that are hurting the amount you realise, this could be significantly below your expectations. e.g. Taxable business value £167K; Financial value (current) £280K; Financial Value with change and growth orientated goodwill £650K; Currently marketed for Strategic Buyers at an inflated value (despite not changes) between £1 - 2M - Result the business will not sell to a strategic buyer and the owner will then have a choice of the low Financial value or to work on key areas to increase realised value by 2.5X.

Don't leave it to chancers, speak to an expert - It's your money!