June 30, 2021
Before selling your business, you’ll need to do some preparatory groundwork to get it into shape. Prepping your business and making it sale-ready before you hit the market will enhance its attractiveness to potential purchasers and increase its sale value.
With this work complete, the next step is to put together an information pack for prospective purchasers.
The information memorandum is the prime selling document and is governed by the Financial Services Authority. It will include basic information about your business, including:
With the preparation work complete and your business operating from a strong position, you can begin marketing your business. Sales cycles or seasonal fluctuations could influence a potential buyer’s perception of your business so consider this when deciding the timing.
Opt to use a professional adviser or broker to help you sell your business. They will be able to use their existing contacts and networks to identify potentially suitable purchasers. They will also approach and vet potential buyers on your behalf.
If you choose to market your business yourself, you could use trade magazines, online selling sites and industry associations to offer your business for sale.
Prospective purchasers usually have up to six weeks to propose an indicative bid following the initial approach. Due diligence may be carried out on your behalf to provide more thorough information than the information memorandum and clear up any uncertain areas during this period. Following this more detailed report, prospective buyers will be asked to submit formal bids.
At this stage, the more interest and competition for the purchase you can generate, the better the offer price. Your professional advisers will help to evaluate the bids and negotiate with potential purchasers.
The next step is to award exclusivity to one purchaser. The usual process is for the potential buyer to undertake their due diligence to verify that the information you’ve provided them with is correct. Following this, the purchaser will decide whether to continue with the acquisition or even amend their offer.
Once you’ve agreed on a deal, the solicitors will need to put in place a ‘sale and purchase agreement’, and final negotiations will take place before exchanging contracts.
The sooner you involve professional advisers in the process of helping you to sell your business, the more likely it is that your sale will be successful. To find out how we can assist you in achieving a sale, please get in touch.
