When it comes to selling a business, most owners think that it is simply a case of marketing the business for sale and finding a potential buyer. However, you would generally not put your residential home on the market without perhaps attending to any overdue maintenance jobs and making sure it appears clean and tidy to potential buyers. Why then would you not do the same for your business?
A number of steps can be actively taken to give your business ‘kerb appeal’ to purchasers and boost the prospects of a successful sale.
Where to Start when Selling a Business?
Admittedly selling a business is not as straight forward as selling a residential property; but the same rules apply to make sure that you present the company in the best possible light to potential suitors. Attending to corporate housekeeping and repairing any overdue or neglected matters can significantly add value and prevent ‘leakage’ when negotiating the deal.
Here are just a few simple suggestions to help prepare your business for sale:
- Think about the employees working in your business. Do they all have written contracts of employment? Do any key members of staff need tying into longer notice periods? Are they bound by sufficiently robust restrictive covenants if they do leave?
- Make sure you review stock regularly. Ensure that any slow moving or obsolete product is sold, written down in value or otherwise dealt with prior to sale.
- Are there any contracts with suppliers or customers that can be terminated by a change of control? Do any verbal agreements need documenting into written contracts? Review arrangements with any supplier or customer that represents more than 10% of total revenue as a priority.
- Does your business rely on any intellectual property rights? If so, review any existing registrations at the Intellectual Property Office and consider if any trading styles or logos need protecting as registered trademarks. Make sure that any domain names used by the business belong to the company rather than your web hosting company.
- Ask your solicitor to review any property deeds or leases. This can help to ensure that there are no issues which need resolving. It is not uncommon to find that a lease may have expired or that there are latent dilapidation claims that may need dealing with on the exit of a lease.
- Ensure that you keep your business premises clean, neat and well organised and attend to any repairs needed. Make sure any plant or equipment in the business is well maintained and kept serviced and up to date.
In short, consider your business through the eyes of a prospective purchaser. If you were to sell your house you would make sure it had ‘kerb appeal’ to buyers – selling your business is no different. By taking a few sensible precautions, you will be able to maximise the return on your investment when the time comes to sell.