Thinking Of Selling Your Business? Here’s How To Make It Painless
Many people dread the day they have to sell their business – root canal treatment is a more preferable option.
It doesn’t need to be like that – some thought and planning can turn it into a rewarding exercise.
Have an exit strategy
If you decide to sell
- At least two years’ financial statements which should show good and increasing profits. If the financial statements are not audited, consider doing this. An audit will give a purchaser that extra assurance that the financials are independently and fairly stated.
- A comprehensive due diligence process, so start thinking about what should be part of this –
- A succession plan. This will give a purchaser comfort that the business can be managed without the owner. It will also indicate that the staff has some form of assurance their livelihoods are being looked after. If the staff are happy, they will be productive.
- A good business owner will want to leave a legacy, so ensure the organisation will be well run after you have left.
- Complete staff records – years of service, salaries, promotions, disciplinary issues and so on.
- Well documented systems and procedures. This indicates to a prospective purchaser the business is well managed and well run. It will also be of value to them when they take over the business.
- All other pertinent information such as leases, major contracts, any disputes or pending legal matters etc.
- Records confirming that all compliance measures are in place including that the business has tax clearance and all laws are complied with. Minutes of meetings, especially board meetings, will need to be comprehensive with all legal requirements fulfilled e.g. notice periods for meetings.
- Your customer list. It’s good to review it well in advance, so if there are any gaps, new customers or new segments can be found.
- A list of business assets.Putting together a due diligence is very time consuming but doing it over a period of time will make it more comprehensive and it will be easier to compile. It gives you time to ensure that the business will look attractive to a purchaser.
- Have the business valued by an independent valuer. Doing this well in advance of selling is also beneficial as it will indicate any shortfalls in your business which you can rectify before going to the market.
Selling a business will be a lot easier with good planning and preparation. Talk to your accountant who is in a good position to give you sound advice.
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