How to Sell Your Business
People sell their businesses for all sorts of reasons, whether they are planning to move on to other opportunities or simply want to retire. But motivation and opportunity are very different things when it comes to selling a business. A high-value sale takes planning, time and effort, and can involve a great deal of emotional toil for someone who has built a business from the ground up.
Planning your exit strategy
Although many business owners may intend to sell their business at some point in the future, a large number don’t actually start planning for it far enough in advance. In an ideal world, entrepreneurs would start thinking and researching their business exit at least three years ahead, giving them a good opportunity to get a great price.
There are three elements to selling any business:
- Research the market
- Discover its value
- Find a buyer
Researching the market means looking at other acquisitions that have taken place in the same sector, and establishing what made those companies an attractive prospect. These might be competitors, so you may already have a good idea of what made them appealing for a larger buyer.
The things that make a business an attractive acquisition may seem obvious – rising profits, a strong customer base, on-going and long-running contracts – but they can provide a great checklist to mark your own business against. And the better your mark, the greater the value you can place on your business.
Finding a value is one of the trickiest parts of the process. Accountants may be conservative; business brokers can be flattering. The real trick is to find the right buyer who will pay a premium for a business because it provides a great solution for their own business problems.
Identifying several buyers is key to establishing a deal with one. Not only will this create the potential for competition for your business but it also creates possible back-up options. Considering which companies offer the best fit for your own will help you identify which will benefit the most from acquiring your business.
Legal requirements for selling a business
The key requirement for any business owner planning to sell up, as laid out by the government, is that they must inform any employees who are affected by the sale. There are also potential tax implications, whether you own a limited company or are a sole trader – look out for any capital gains you might have made, VAT registration, national insurance contributions and the duty to inform Companies House.
Plan what to do with the proceeds
Having sold your business, the next question you’ll need to face is what to do with the money. Again, planning ahead is essential because this will help you deal with any tax issues and income.
If you want to be sure you can retire the way you’ve always dreamed of, speak to gpfm’s financial planners today on 01992 500261 or firstname.lastname@example.org. Our retirement planning services will help you find the best ways to save for retirement.
This article is for information only and must not be considered as financial advice. We always recommend that you seek independent financial advice before making any financial decisions.