Things to think about

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Here is a list of things to think about if you are serious about selling your business.

We are happy to talk through any of the issues listed.

1. Why Are You Selling?

It is important to have a credible reason for a sale, one that a purchaser can understand and feel at ease with. It also helps us structure the most advantageous transaction. Reasons for a sale can include:

* Retirement

* Ill health

* Trading difficulties

* An unsolicited approach

* Director / Partner disagreement

* Change of direction

* Other business interests

* Business has grown above the management experience level

2. Type of Sale

What kind of sale will deliver you the best value?

* Asset and goodwill or share transfer

* Trade sale

* Listing

3. Tax Regime

It is very important from the outset to know what the tax consequences of a sale will be. Often what you are left with is more important that what you receive.

* Captial Gains Tax (CGT)

* Roll over relief

* Taper Relief

* Enterprise Investment Scheme (EIS) or Venture Capital Trust (VCT)

4. Handover

Does your business have management in place that can run things in your absence? If not, you need to consider the length and type of handover you are prepared to give.

5. Price Expectations

Are your price expectations realistic? How much would you pay for your business? Educated buyers are smart and will only consider realistically priced businesses.

6. Valuation

* Goodwill

* Maintenance of profits

* Market multiples

* Return On Capital Employed (ROCE)

* Add backs for personal ownership

* Net Asset Value (NAV)

7. Method of Payment

Most buyers may want to defer some of the consideration. Businesses which ask for 100% cash usually receive less than their asking price. Many buyers will be suspicious if you don't accept a deferred payment as it suggests a lack of confidence in your business. That said, all deals are unique and structure depends on individual circumstance.

8. What Do Buyers Look For?

Remember, being able to supply correct management information in a timely fashion shows that you are organised and efficient. You don't want buyers to lose interest because basic information isn't to hand.

A buyer and his advisors will probably look for or raise the following issues so they can fully understand your business:

* 3 years accounts. Monthly management accounts, if in current year

* Business plan

* Company literature, brochures etc.

* Company information, shareholdings

* Asset inventory

* Staff: salaries, ages, job titles and length of service

* Reason for selling

* Ongoing management

* Profit record

* Strong cash flow

* Stable margins

* Good management controls

* Good spread of customers

* Up to date contracts or agreements

* Potential for growth

* Position in the market

* Strong brand identity

* Price expectations

* Tidy well maintained appearance

9. No Surprises

Most adverse situations, such as landlord/lease problems, outstanding loans, tax arrears, unfavourable equipment leases, health and safety issues, other regulations, and staff problems can be overcome providing they are disclossed in an up front, honest and open manner.