Time to Settle Up? How to Get the Best Price When Selling Your Business

So you’ve had enough of your start-up business, and want to sell it while the going’s good and move on to better things (or simply retire on the profit you make?). Good for you – but beware there’s lots to do before you sign your last business agreement. There’s too much to cover in one article, so I’ve boiled it down to the question on most business owners’ lips when they’re looking to pass the baton: “how do I get the best price possible for my business?”

Plan Ahead

Well, for starters ideally you will be aware you want to sell several months – maybe even years – in advance of time. This will not only give you more time to consider bids and get things in order, but will also ensure you don’t end up selling at a low point in the economy, or in a seasonal slump. Of course it goes without saying that the best time to sell is when profits are on the up with potential to go further, so if you have a company that thrives at a particular time of year, then aim to have signed your last business document by then.

This steady slowing down process also allows you to make sure every aspect of your business is in order for a smooth transition. Get key business agreements in order, ensure the equipment is well maintained and that you’re complying with all legislation – all of this will make for a smoother handover, allowing you to move on quicker.

Have your Finances Up to Date

Of course the most important aspect of your business to potential buyers is how much money it can make them – and to that end, how much money it made you is important information. Get your financial business documents in order, and make sure you have 3 years worth of income statements, tax returns, the lease, any loans against your business and other documents that might be relevant to making that sale. Be completely prepared to answer any questio ns on your business’ finances and you’ll give potential buyers complete confidence.

Make your Business Shine Ahead of the Sale

To get the best possible price on your business, you need to have it looking attractive to buyers. Make all your business documents as impressive as can be, try to boost your quarterly sales with an aggressive campaign, and avoid any big purchases in the closing months to make your profit margins look that bit more impressive. As impressions count for a lot, it may even be worth giving your offices a clean and a fresh lick of paint!

Why Are You Selling?

People are understandably suspicious of buying something that you seem extremely keen to sell. As such, this is invariably a question you will have to deal with, so make sure your answer is sincere while not putting off the buyer, or making you seem desperate to sell for any price!

Don’t Price Yourself Out of the Market

There&rsqu o;s nothing more certain to scare off potential buyers than an unrealistic asking price. Not only this, but it gives the impression that you’re not serious, so you’re unlikely to get any bids, let alone ones that approach your estimation! As a general rule of thumb, the lower the down-payment required, the quicker you can sell your company.

Consider Outside Help

If you don’t feel comfortable aggressively selling your business, maybe it’s time to consider hiring an agent to give you a kick start. If you feel comfortable letting someone else have access to your business documents, they can negotiate with targeted buyers and ensure confidentiality on your behalf. The downside to this is that they will charge between 3 and 7% of the sales price, possibly alongside an upfront fee. If you think you can handle it yourself then you may end up with more, but the flipside is that a good agent can potentially get far more for a sale, meaning yo u end up with more! Consider your bartering strength, and make your decision based on that.

Don’t let the Business Slide!

With all these things to take care of, it’s understandable that many managers lose sight of the day-to-day running of their businesses, and sales targets get missed. This can make your company look very bad to potential buyers, so it’s vital not to let this happen. If you can’t handle it yourself, it may be worth hiring a temporary manager to deal with the day to day staff management and organisation of business agreements, leaving you to mix with buyers.

Iain Mackintosh is the managing director of Simply-Docs. The firm provides over 1100 UK business agreements covering all aspects of business from holiday entitlement to employment contracts. By providing these legal documents (with content provided by leading commercial lawyers, HR and health & safety consultants) at an affordable price, the company intends to help small businesses avoid costly breaches of regulation and legal action.