Alan Limb from our Southampton office shares his thoughts on how businesses could prepare themselves for sale more effectively.
There are many programmes on television these days which can help us learn how to prepare our house for sale. You are probably familiar with the concept of "Kerb Appeal", making sure that your home gives the best possible first impression to anyone coming to view it. However, at BRI, we are often asked to advise owners who haven't applied this concept and considered how to make their business equally attractive before putting it on the market. As a result, It often takes them far longer to achieve a sale of the business with the price realised being less than they hoped.
In order to maximise Kerb Appeal, what should business owners consider?
- Ensure that the business is presented in the best possible light. It should:
o Be profitable in a way that can continue after the current owners are no longer involved
o Look attractive, being clean, tidy and with enthusiastic staff
o Enable interested parties to see the potential, rather than problems or pitfalls
o Not have any inherent legal disputes, contractual disagreements or physical problems that would deter any purchaser
- Take advice from their Accountant and Solicitor before the business is advertised for sale. This will include:
o Preparing up to date accounts that clearly explain the business' profitability and potential
o Taking tax planning advice on the timing of a sale so that the owners can retain as much of the sale proceeds as possible
o Ensuring that copies of all key documents that a purchaser might need (e.g. property leases) are available
o Making sure that all employee paperwork (such as contracts and policies) is complete and compliant
- Be careful to choose the right agent to market the business for sale. Points to consider are:
o Interview a number of agents to decide which is the best to choose for their business
o Seek their advice on the business' likely value, rather than the price it should be advertised at
o Obtain feedback from other buyers and sellers who have used the preferred choice of agent
o Ask a friend to act as a "mystery shopper" for other businesses that the preferred agent is marketing
o Be wary of instructing an agent who insists on a fee simply for advertising the business and/or a lengthy period as sole agent
- Remember that employees are crucial to a successful sale:
o Tell them in advance that the business will be advertised for sale
o Discuss and address any concerns raised by staff
o Consider rewarding staff for helping to achieve a successful sale
o Ensure that owners are present at all viewings and discourage employees from speaking to interested parties at other times
- Maintain standards until the sale completes:
o Respond to requests for information honestly and thoroughly
o Continue to make profits to avoid last minute price reductions
o Regularly review marketing with the agent to agree any changes of strategy that are required
o Take advice from the agent and other professionals on all offers received
o Work with the purchaser post completion to ensure a smooth handover
Hopefully a successful sale will result from these steps giving the former owners time to put their feet up and enjoy the fruits of their labour.