For business owners that have been considering a sale, widespread reports that an increase in Capital Gains Tax could be unveiled at an upcoming budget may have made securing a sale suddenly seem like a more urgent matter.
Despite the inherent tax advantages of locking in a sale before any potential change to CGT, the first thing to state is that it’s important to not rush into a sale and conduct the process in a manner that could lose you money or put the business into the wrong hands.
With that said, it is still possible to take certain steps to speed up the sale of your business, while still going about it in the right way. Here are three tips that could help you to make a quicker business sale.
Get a good valuation
Getting expert guidance to help you quickly produce an accurate, demonstrable valuation of your business will be key to getting the sales process moving. It’s important to state at this point that getting a “good valuation” does not mean the highest possible valuation of your business, it means an accurate valuation.
A sure-fire way to drag out a sales process is to go into it with a valuation that is unrealistic or excessively high. Potential buyers will be instantly put off and even if any do still register interest, it’s likely that the negotiations will be drawn out as they attempt to drive the price down to a more realistic sum.
Getting an accurate valuation of your business, with the documentation and expert insight demonstrating how the figure was reached and what it covers, can significantly speed up the sale process.
While some potential buyers may naturally still seek to negotiate the price down, an accurate valuation gives you a solid foundation from which to argue your corner and achieve a sale that comes close to your business' worth. Although, if buyers know you're trying to sell quickly, this may weaken your stance and you may need to prepare for compromise.
Prepare, prepare, prepare
Among the most time-consuming processes in a business sale is the buyer’s due diligence, as any legitimate, serious buyer will want to take a thorough look at the business’ financials and other documentation before committing to anything.
Obviously, this is going to be an intensive task no matter what, but the thing that can really draw due diligence out and pose serious delays to a sale is if the buyer is being forced to trawl and sort through mountains of disorganised paperwork going back years.
Having documentation sorted, filed and ready in advance will be invaluable to speeding up the sale. So, prior to the buyer’s due diligence process, make sure documents like balance sheets covering at least the past three years, tax returns, inventory, contracts and leases are all organised and can be easily pored over by the buyer or their advisers.
Not only will this speed up the due diligence process, it will help to ensure that you’re familiar with the financials etc. of your business and can answer any questions potential buyers may have and will also help to build trust and a good relationship with buyers.
It might be easy to think that once you’ve prepared your business for a sale you can just sit back and wait for the offers to roll in. But if you really want to speed up the process then proactivity is highly advisable.
Rather than just waiting for buyers to approach you, consider making some approaches yourself. Think about who might be interested in buying your company. Are there any competitors that might jump at the chance of taking over your business? Or consider some of your existing contacts. Do you know anyone at an acquisitive company that might be interested? Or maybe there are companies that have approached you in the past regarding a potential acquisition? These could all be valuable people to call when you're seeking a sale.
Utilising contacts and knowledge such as this can save both time on the sales process and money that might otherwise be ploughed into marketing the business.
Discussing a “fast sale” can call to mind images of an owner selling by any means necessary and to any buyer just in order to get out the door. It’s true that any proper sales process will require time, effort and a measure of patience. But it’s also true that there are steps that you can take as the seller to help the process move along more quickly and ensure that your sale doesn’t drag on and potentially lose you money.