Are you ready for life after your business?
Selling your business is an emotional time and usually a one-off life event. Rarely are you given a second chance. So the following should be considered if you are a business owner or entrepreneur planning to sell your business, writes Ben Hewitt of insurance specialist, Alan Boswell Group.
- Who will buy your business and what will you be selling?
- When will this happen?
- Without you, can the business still function?
- Are you planning a clean break post-sale?
- How much, to the nearest £1 million, will a buyer pay?
- Are all shareholders in agreement?
Plan with foresight, don’t regret with hindsight
Let’s face it: Your balance sheet needs priming for sale. Cutting costs and increasing margins. This, as many corporate finance executives would say, can take three years or more.
Even if a buyer knocks on your door tomorrow and offers an enticing price, it will take time to sell because your business isn’t prepared. You are either building your business for growth, or for sale. Accounts, due diligence, staff contracts, intellectual property, etc. will all need attention.
Finding your number
As Financial Planners, we help entrepreneurs like you uncover how much money you and your family need to live the life you WANT. A life that allows you to spend time with those closest to you. A life without fear of ever running out of money.
Working becomes optional; it’s a choice, not a chore. We can help you calculate your own personal number, providing you with the knowledge that you can sell your business and achieve financial independence.
The risk of not knowing your number is real. Holding out for a larger sum that you don’t need, or selling for a sum that isn’t enough but looks good on paper are real risks.
Be active in discussions
Hiring people to sell your business for you does not mean that you take a step back. Far from it. Attend meetings. Read every page of documents (carefully). Ask questions. Pressure will be put on you. Take time to think. Walk away if necessary. Far better to pay failure fees than to sell your only business for the wrong sum, at the wrong time, to the wrong buyer. Even down to deal day: you can expect pressure until the early morning. Be prepared for it.
Consider the detail You are selling your limited company business and sometimes a decade or more of your hard work. But what is the other party buying? Will you opt for a share sale or an asset sale? And what about goodwill?
A clean break for you. The entire company and all liabilities sold as a going concern. Employee contracts remain in place. As a seller, you can retain a lot of discretion and your employees may not be aware of the sale process. Good for you, but is the buyer taking on your liabilities? A buyer may apply a discount to reflect the increased risk.
Usually fewer risks for the buyer and talks are often more straightforward. You agree with the buyer which assets and liabilities are to be transferred. You can keep hold of assets of value to you – or keep to sell at a different date.
Your business is simply worth what a willing buyer is prepared to pay you. Don’t let vanity and ego get in the way of a successful sale. Know Your Number.
Consider the types of consideration Cash is king. Will the buyer give you 100 per cent cash, or a combination of cash, earn-out, loan notes or shares? What’s best for you and your family? The wrong buyer
This is the ultimate test of your moral code. A big number can lure most people. But could you look your employees, customers and suppliers in the eye?
If you are getting closer to that time, or want help in working out ‘your number’, get in touch. We will help you to discover what you want from life, design a personalised financial plan and a robust investment portfolio to get you there.