What does it take to get a small company ready for a sale, to get the best possible price for it and make a smooth exit in a recession?
1. Plan ahead. Work out what potential buyers will focus most on and make sure that these elements are squeaky clean.
Otherwise the temptation will be to try and use those things to reduce the price. Risk mitigation is the theme.
2. Prepare to stick around. As the seller, you will want most of the price paid up front. The buyer will want the reverse.
If you accept that part of the price will be paid later then you should try and keep control over some elements that the price will depend upon. Staying in the business for a period of time might be the solution.
3. Speak to a qualified tax adviser (this might be your accountant). There is always scope to mitigate any taxes due on a sale – sometimes significantly.
4. Seek legal advice. An experienced professional with a proven track record can help make sure all written agreements are in order, provide support during the negotiations (especially when it comes to the small print) and reduce your risks post-sale.
5. Decide on what your ‘walk away’ position is. If, at any stage, the buyer attempts to alter the deal, you might be better off not selling.
6. Approach the sale as one. Where there is more than one owner or shareholder, divergent views is a weakness which the buyer will seek to expose.
Appoint a lead negotiator and agree all major points in advance. Debates amongst yourselves should be held out of sight of the buyer.
7. Keep discussions confidential. The fact that a sale is being mooted can upset the balance of staff in the business and could disturb customers and suppliers. Business as usual is the right approach.
8. Have a plan for the future. Consider how and where to invest any profits made from the sale.
9. Limit restrictions post-sale as much as possible. Ask your adviser to ensure that any restraint-of-trade clauses are limited by reference to time, type of business, geographical area and so on.
10. Choose your advisers carefully. A trusted and experienced adviser can add significant value to the process and ensure that it runs smoothly.