How long will it take to sell your business? (The answer may surprise you)03rd March 2021
When you buy a house, you run numerous checks to ensure your investment is worthwhile.
Your mortgage lender will carry out a survey to confirm that the house is worth what you’re paying for it.
And you’ll commission at least one survey to assess the condition of the property and uncover any hidden problems.
Very often, there are follow-up checks if you discover potentially serious issue like damp or problems with the structure.
And when that does happen, you can often negotiate a reduction in price.
It’s all about managing your risk.
Your buyer will behave no differently when it’s time to sell your business.
As I mentioned in my last email, right now there is a surge in mergers and acquisitions. And as we move further into 2021, it seems likely that even more businesses will be sold…
…Some out of necessity, but others because after a long pandemic, the owners decide that they’d like to do something different with their life or to retire altogether.
Perhaps you’re amongst the many business owners reconsidering their priorities, and beginning to contemplate such a change.
If so, it’s important to understand that you can’t just charge what you want for your business - or what you believe it’s worth.
It sounds obvious, but I’ve seen many business owners make that mistake. When you get emotionally attached to the company you’ve nurtured for years, you can get an inflated sense of its worth and feel reluctant to part with it for any less.
But for your buyer, this is pure business.
They’re going to be examining every facet of your company to make sure it’s worth what you say. And they’ll be searching for problems which will allow them to negotiate a reduction in price.
Buyers are like hound-dogs sniffing around for weaknesses…
So how can you protect yourself and ensure you can achieve the maximum possible value for your company?
It’s actually simple.
You need to make sure they can’t find any weaknesses - particularly with your finances, which is one of the main areas they’ll be looking at.
So your company’s finances need to be well run.
You need to have in place the most professional financial processes, systems and controls, so that your money is managed properly.
And it goes without saying, to get your company’s full value, you need a positive financial track record.
Finally, you need proof!
All this counts for nothing if you don’t have ongoing financial reports showing that your company is as valuable as you say it is.
Your buyers will want to pore over those - so your records need to be in order.
This can take a while to put together.
A house owner might give their property a new lick of paint and hide all the clutter before they put it on the market, to bump up the value.
But you can’t paper over the cracks like that in a business.
Like I said, your buyers are going to want to look at several years’ worth of financial reports. You can’t fake those when you decide to sell up. Without them, you’re like a sitting duck for bargain hunters.
And if there are financial issues in your business, these can take months or even years to sort out.
That’s why you can decide to put a house up for sale quite quickly.
But to sell your business, you need to plan several years ahead.
In fact, if this pandemic has made you reconsider your future, and if retirement or selling up is even vaguely an option, you shouldn’t wait.
You need to start planning NOW…
…Even if you don’t take action until 2025 or 2027.
We can help by implementing world-class financial management in your business as quickly as possible.
We have experience running the finance department of dozens of companies just like yours, so there’s no learning curve. And we have turnkey systems and processes that can be applied to your business on Day 1.
You’ll get clear, accurate and timely financial information to help you make better financial decisions for your company…
…And we’ll start building up that written financial track record which your buyers are going to demand.
Best of all, we’ve been through the sales process with several companies, so we can help you draw up an effective ‘exit plan’ and when the time comes, help you with the actual sale.
One of my proudest moments as director of Insight Associates was sitting at a negotiation table opposite the lawyers negotiating the purchase of one of our clients…
…And hearing them say they simply couldn’t fault any of our financial records.
They were so complete, and the company finances were so well-run, that there was no crack to exploit to ask for a discount.
Let us do the same for you.
Call us today on 01279 647 447 or hit ‘reply’ to this email to get in touch with me today, and discuss how we can professionalise your financial management.
If you’re thinking of selling at any point in the 2020’s, there’s no time to waste.
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