Whatever your reasons for deciding to sell your business, your next decision will be every bit as crucial: Who’s the best person for the job? You may want to enlist the help of a professional business broker, or you may fancy taking on the sale yourself.
Of course, there will be pros and cons whatever your choice, so let’s look at what the sale process entails and some of the issues involved with each of these options:
You can’t really sell without an independent professional valuation of your business. No buyer will simply accept your estimate of the worth of your company. So, choose a professional valuer who understands your sector – especially any sector-specific valuation methods which buyers will automatically expect you to use.
Whether you arrange this yourself or use a business broker, don’t cut corners here. You will be relying on this valuation to negotiate a price with your eventual buyer, and it will soon become an essential point of reference throughout the sale process.
Marketing and promotion
If you appoint a broker, make sure it’s one with a successful track record within your industry. Before appointing a business broker, you should: Check who would recommend them, enquire whether they have any potential buyers waiting in the wings, pinpoint how, when and how frequently your business will be listed and otherwise marketed. And above all, you should ask what sale fees and commissions will be charged, and whether these are settled upfront or after the sale.
Of course, even with a broker on your case you can still remain pro-active within your own networks. After all, if you can generate some quality ‘leads’ yourself it may well hasten the eventual sale. And if you go it alone, you will be able to augment this personal approach with listings via dedicated online business selling platforms, or an approach via your own trade association. But so much will depend on whether or not you can correctly identify your target audience.
Marketing a business has many strands. For example: Will you be able to ‘pre-qualify’ a keen buyer? Perhaps to gauge their intentions and establish that they can fund the purchase? And perhaps the greatest stumbling block any self-marketer may face: How can you advertise a business for sale, without destabilising your relationships with staff, suppliers, market rivals and customers?
For some business sellers, appointing a discreet broker with the trust and gravitas to sell your company, while simultaneously safeguarding your business anonymity, is the only realistic solution.
As you will understand, the legal side of trading is complex at best. And when it comes to sale time there can be serious consequences if you get it wrong. So, unless you are supremely confident, you or your broker may need to consult in detail with lawyers, accountants and tax experts. The main areas of contention and buyer enquiry are likely to centre on: staff contracts and conditions of service; inspections, insurances and licenses connected with your trading premises; detailed listing of your assets and liabilities; plus perhaps scheduled information about the status and interests of shareholders.
If you manage the sale for yourself, you will need to be a competent negotiator. But even if you do possess such skills, there are times when a business broker (who is also a skilled negotiator) may be able to navigate a smoother path – being independent can sometimes be a trump card.
However, it must also be said there is surely no more passionate advocate for the merits of your business than you as the present owner. Just be careful you’re not so forceful that the would-be buyer starts to believe you ARE the business. Otherwise you might talk them into walking away – just because, without you at the helm, they are purchasing a potential one-man-band outfit.
And likewise, you may have so much emotional capital invested in a good outcome that you may fail to see residual sale potential when good or bad negotiations start to look like they are rapidly slipping away. This can be the moment when an experienced business broker can seize the chance to compromise and pull off a sale – when you could only see a lost cause.
Unless you are fortunately presented with an out-of-the-blue offer, your best option may be to take a hard look at your own skill set and use professional help wherever and whenever you can see the advantages. Nevertheless, if you stay in touch with the process, it could also be your own contribution which proves decisive in the end.
By Jo Thornley, Head of Brand and Partnerships at Dynamis. Joining in 2005 to co-ordinate PR and communications and produce editorial across all business brands. She earned her spurs managing the communications strategy and now creates and develops partnerships between BusinessesForSale.com, FranchiseSales.com and PropertySales.com and likeminded companies.