Whether you're ready to retire, pursue a new venture, or simply capitalise on your years of hard work, taking the time to strategically prepare your business for sale can make all the difference. In this blog, we take a look at the things you need to consider to ultimately achieve a smooth and rewarding exit.

Deciding to Sell – An Exit Plan

They say you should never start, or buy a business, unless you have some idea of who you might sell it to – in other words an Exit Plan. You might be wondering “why should we be thinking about getting out when we are just getting started?” Well, because by having thought about your exit strategy at the start, you’ll hopefully make good decisions along your business journey to help ensure that one day you’ll get out in the best shape possible. Having at least thought a bit about how and to whom you might sell, you’ll more than likely ‘shape’ the business for a better sale outcome.

Getting your timing right

As they say timing is everything in life, so having an exit strategy in place can be a great tool in helping you decide if the ‘time is right’. In our experience it can take years to get a business market ready for sale, and/or there could be factors that can drag the process out such as market cycles and industry related downtimes. As part of your exit strategy you should consider your age, health, and the overall performance of the business. Having a five-year plan for your exit is common, giving you the necessary time to plan your exit and transition the company over to a new owner.

Preparing Your Business for sale

1. Define your goals for the sale

It’s important to articulate your objectives for exiting the business, whether it's financial gain, handing the business to the next generation or personal reasons such as poor health or a desire to retire. Sit down and ask yourself WHY you’re selling up and make this goal (or goals) the heart of your exit strategy.

2. Get a realistic valuation

To understand your potential sale price, it’s vital to get an accurate valuation of the business. Work with your accountant to understand the value of your business assets and consider engaging a broker with experience in your sector, to get a feel for the market and price. Knowing the true worth of the company will help you negotiate more favourable terms with a buyer, generating a better sale price.

3. Do your housekeeping

To best position your business for sale it’s important to keep your house tidy! Your financial records are really important as they (hopefully) show stable financial health and good asset management so spend some time ensuring your systems are robust, you have tight financial control and good the business assets are in good order. Do what you can to reduce any risk by formalising deals, secure key staff, and diversifying your customer base.

4. Don't forget about marketing

Spend some time thinking about how you will market your business for sale. What are the potential improvements, and areas for future growth? How is your business perceived by your customers and community? Do you have good people working for you? Consider who would potentially be interested in purchasing your business – perhaps a current competitor, supplier, or family member.

Here at BFA we can assist you with developing an exit plan, and/or positioning your business for sale. Contact your Client Advisor or send us a message if you wish to discuss this further.