Start planning by obtaining early advice
Securing effective early advice – ideally at least two to three years ahead of when you intend to exit – is of paramount importance in identifying potential obstacles that could prevent you securing maximum value for your business.
Experienced corporate finance advisers will help you to understand your options, advise you on tax issues, value your business and identify challenges which require addressing. They will also support you in implementing solutions to potential challenges and obstacles.
Because we understand that selling your business will probably be the most significant business transaction of your life, Contact us for a free, no obligation meeting to discuss your exit plans.
Understanding the available options
Selling your business to another company is not the only route to sale – and may not necessarily be the best option for your business.
There can be significant benefits in selling to your management team through a management buyout (MBO). Advantages can include sustaining the business as an independent company, securing the employment and future of your staff, rewarding loyal managers while avoiding the uncertainty associated with selling to an external party. Understanding at an early stage how an MBO might work – and how it could be funded – can help you consider whether this is a viable option.
Contact us for more information on an MBO, or visit our management buyout website which gives specialist advice, information and guidance.
Don’t overpay the tax man!
You could forfeit 18% of your consideration by not getting your tax right. Most shareholders are eligible for Entrepreneurs’ Relief which reduces the tax rate on the capital gain to just 10%. Take early advice to make sure all shareholders will qualify for this important relief.
Understand what your company is worth
Knowing exactly what your business is worth enables you to make informed decisions about whether to sell, when to sell – and how much to sell for.
Establish what your company is worth now along with its potential future value as your business plan evolves. Does the value meet your expectations? Is it sufficient to fund your retirement? If not, you may need to adapt your business plan to build capital value and make the business more saleable.
Our team at Strategic Corporate Finance has amassed a wealth of experience in valuing businesses – as reinforced by the successful transactions we have completed. Avoid being seduced by business brokers giving inflated valuations and contact us for pragmatic and honest advice.
Keep abreast of sector developments
Engaging with a top class corporate finance adviser at an early stage will enable you to gain an insight into the volume of company transactions in your sector – so you can build up a picture of who is buying, why they are buying and what they are paying.
Being equipped with this valuable knowledge and information will help you to understand what specific features buyers are seeking in your sector.
An experienced corporate finance adviser will inform you of corporate activity, help you to interpret it – and advise on how to maximise the trends which are identified.
Sell at the right time
Knowing the right time to put your company on the market can substantially influence the offers you receive.
Buyers will invariably base their offer on the financial performance of the most recent annual accounts. If these show poor results, it will be understandably harder to persuade them to submit a good offer.
The best time to sell is when you can demonstrate 2-3 years of strong trading results showing growing turnover and stable margins along with realistic forecasts that the growth and margins are likely to continue.
Additional value drivers include deal activity in your sector – reinforcing the importance of closely monitoring sector transactions.
Because every company and situation is different, it is important to secure early advice on how potential buyers would view your business in the current climate.
Drive your exit strategy
Take ownership of your exit strategy and avoid waiting for offers to come your way.
Engaging advisers to conduct a formal sale process will create competition among buyers and maximise the value of your business.
Commission the right adviser
Having the right adviser to guide and support you through the process can substantially maximise the outcome.
Ensure your advisers are highly experienced, able to provide a personal service and can competently market your company to derive maximum value for you.
It is also important to understand the different approaches adopted by business brokers and corporate finance advisers – the costs are often the same but the service is very different.