What does it take to successfully sell your business?

You’ve operated a business and built it well. Now you want to hand over the baton to someone who would operate it as successfully.?

Question Time :

Do you have the skills now to market your business and achieve a successful 100% sale?

What would it take to successfully sell your business ??

The decision to sell your business is a landmark one, and can be a very emotional one too. Whether you are an entrepreneur or an owner of a family business or a successful business with partnership, everyone would want to see the business do well after they’ve handed it over, but also more importantly maximise their gain from the sale.

Some fundamentals that you must keep in mind when you want to achieve a successful sale.

1. Continue to focus on your business

It is crucial that you and your management team remain focused on operating the business and building on its existing success. The focus of the Management team, irrespective of the goal to sell the business, should be to operate successfully and profitably. Potential buyers look at trends and any drops would discourage offers or adversely affect the valuation for the transaction.?

2. Bring together a team of experts

Put together a team of experts who can get the job done. This team needs to include both members from the business as well as external experts. The business team key members of the management who possess knowledge and expertise about the business’ operations, assets, and liabilities. Although all important stakeholders should be part of the team, do ensure to keep the internal team to a minimum and be mindful of how much of their time is required for this. You may not want the operating management team to lose focus and be distracted from their day-to-day focus on operating a successful business.

3. Team structure with Mergers Acquisition Experience

Outside professionals who are critical to the sale process include experienced mergers and acquisitions specialists who know the market landscape and are experienced in structuring and negotiating business sales. These could be advisors, legal, finance, accounting and tax professionals who know the game and have a wider network of potential buyers. Experienced professionals come at a cost, but the value of their contributions generally exceeds their fees. They ensure that you get the best price and the entire process is a win:win and one that satisfy the needs of both you and the buyer. Entering the sales and negotiation process with a seasoned buyer without your own expert team of professionals is to be avoided. The legal and accounting professionals best suited to assist in a sale may be different from the legal and accounting advisers you cater to the regular and ongoing business requirements.

It is important to understand that the sale process requires a specialized mergers and acquisitions skill set that may be different than that of your existing team on your payroll.

4. Be Proactive and be organised

Best possible scenario is when your transaction team strategises and implements a plan before the actual sale process begins. This plan includes reviewing your business and organizing all the material that will become part of a due diligence process ahead of time. The last thing you want is to distract your management team during these intense times of the sales process from their ongoing roles and responsibilities.

5. Closing the gaps

Following a review one can consider what changes or additional documentation may be required, which can eliminate due diligence concerns, address risk or otherwise better position the business, not only for sale but to improve overall business operations.?

6. Keeping business and personal segregated

It is commonly seen for privately owned and family businesses to have their personal and business assets and liabilities interwoven. These should be separated even before the sale process begins, so as to avoid additional legal strain on the business sale. At the least, all assets that come under such a purview should be listed so their is clarity that these are not part of the sale process.

7. Accurate, relevant and timely reporting mechanism

Financial books and records are of particular importance. An audited financial statement provides assurance to the buyer that the financial position and results of the business have been accurately reported.?

The books and records should be prepared and maintained in a manner to permit a smooth due diligence exercise. Buyers will conduct one and will want to look for adjustments to EDITDA that will favour their valuation of the business.

8. Consider Real Estate as another business and a different asset class

Real estate has to be viewed as a separate asset group of the business. Not all operating business buyers want to buy the real estate and they may prefer to lease the premises going forward. Sometimes owners will seek to separate the real estate from the business sold. Likewise, a real-estate buyer may be interested in the real estate separately from the operating business.

The above are a few general pointers, but give a good starting point when considering a sale.

The skills used to build and operate a successful business are different than those necessary to achieve a successful sale.