Tips for a successful business sale

In a business environment transformed by global events, shifting markets and new opportunities, many owners are considering whether now is the ideal time to exit. For those who are ready, the next step is crucial: planning and executing a successful sale.

Selling a business is one of the most significant – and often emotional – decisions a business owner can make. It marks the end of one journey and the beginning of another. It also represents a unique opportunity to realise the value of what is, for many, their most important asset.

To help business owners navigate this complex process, we've outlined key strategies and practical insights to guide you throughout the deal journey — from planning your exit to managing the proceeds of the sale.

Preparation for sale

Regardless of your reason for selling, a successful business sale starts long before the "For Sale" sign goes up. The ideal time to prepare for sale is before you approach interested parties.

The due diligence phase of a sales process can be intensive and challenging. Preparing your business for this stage by ensuring you have adequate information available can streamline this process.

Selling your business with the benefit of an experienced and motivated management team is very important. Particularly in an owner-managed business, the risk of knowledge loss when the founder exits the business is elevated. By empowering and developing your management team, you will ensure that the business can sustain itself and continue to perform post-sale.

Value drivers

Look at your business through an objective lens and assess its key value drivers. For example, strength of commercial relationships can be critical to the long-term sustainability of the business. It is important to ensure that these are robust and maintainable.

Internal due diligence

In today’s market, prospective buyers want as much transparency as possible and are performing careful due diligence. Spending time before going to market to properly evaluate and present your company’s financial and business history and future projections is a crucial element in the sale process.

This will identify any key risk areas that may be raised during the buyer’s due diligence process. Identifying these potential issues in advance will provide you with the opportunity to address them before going to market, and will make for an efficient process overall.

Identify a target buyer list

There can often be a large number of potential buyers for a business and typically owners are not best placed to identify the right candidates on their own. Finding a buyer can be one of the most time-intensive elements of the process, but is clearly an important factor in ensuring a successful deal.

In identifying a potential buyer, you must consider:

• Their credibility
• The strategic importance of a potential acquisition
• Their financial capacity to transact
• Their internal approval/decision-making process

Value and deal expectation

Developing an appropriate and achievable value expectation before going to market will help to align seller and advisor. It is important to note that the market ultimately determines the value of your business, and each transaction requires a willing buyer and a willing seller. By taking the time to assess the value of your business in advance will set broad deal parameters at which you are willing to transact and may take emotion out of any decision at a later date.

Considering a deal structure will also be important. The majority of deals involve an element of earn-out consideration and a period of management transition that may require you to remain with the business for a period following sale. Considering what you are comfortable with from this perspective will reduce any ambiguity at a later date. 

Presentation of the business

Time and consideration should be given to the marketing material for the deal. A well-presented information memorandum increases a buyer’s confidence and the likelihood of a successful sale.

Your information memorandum should capture the key credentials of the business – detailing the ownership and management structure, trading performance, key growth opportunities, competitive advantage and market data.

Corporate structuring

Every deal is different and consideration should be given to the most advantageous corporate structure for the sale. Putting in place an appropriate corporate structure that ensures you can manage sale proceeds as efficiently as possible will maximise your financial return.

You should also give due consideration to the various tax reliefs that may be available to you (e.g. retirement relief, entrepreneur relief).

Market strategy

Agreeing a clear strategy on how your business will be presented to market is important. In some cases, a full process is run where a number of parties are approached regarding their potential interest in the business and are invited to participate in the process.

In other cases, businesses are brought to market on a bilateral basis.

It is important to strike the right balance between maintaining competitive tension in the process and identifying an appropriate buyer pool (of one or more parties).

Assessment of offers

In the event that you receive offers from multiple interested parties, it is important to consider the merits and drawbacks of each. No two offers will be the same, and each counterparty will have different conditions attached to their offer.

Weighing these up from a value and execution risk perspective is a key decision.

Navigating due diligence and transaction execution

Clearly defining the scope of due diligence and agreeing timelines for execution with the preferred bidder before entering exclusivity will provide for an environment of understanding where all parties are aligned to complete the transaction efficiently.

Maintaining momentum in the process at this point is particularly important.

Managing the proceeds from the sale

Once the sale has been completed, it is important to obtain the correct financial advice so you can map out your financial goals and determine how best to invest your money. Consideration should be given to who will receive the proceeds from the sale – whether it is you personally or a limited company that is owned by you.

There are tax implications attached to this decision that need to be considered.

Conclusion

Selling your business is more than just a transaction – it’s a pivotal life event. With the right preparation, support and strategy, you can maximise your return and move on with confidence.

At Crowe, our corporate finance team has deep experience in helping SME owners through every stage of the business sale process, from initial planning to deal closure and beyond.

If you're considering selling your business, get in touch with a member of our team. Let us help you make your next move the right one.