How To Sell A Business: Maximising Value & A Deal

Whether you’re a fresh small business owner or a seasoned operator, the sales process for offloading a company isn’t something you can take lightly. It’s a battle from start to finish. The ultimate prize? A swift and lucrative sale with minimal inconvenience. And if you want to claim that prize, you need to ensure that you follow the right process.

In this guide, we’re going to set out the key things you need to do to sell your business in optimal style. Our business advice will take you all the way from deciding what you want to achieve to finalising the last piece of paperwork. It’s a framework, though, so huge portions of this process are purely for you to decide as you go along.

Given our work and proven track record in the field of selling and buying businesses, we’re in a good position to help you should you need direct advice or guidance. We maintain various specialist sector teams to cover different business types. Email links to those teams follow, so take advantage if you need insight into one of the listed niches:

Now, let’s move on to the meat of the matter. Here’s our guide to selling businesses.

1: Lay the groundwork

Before you start trying to sell your business, you need to run through various preparatory steps. You can skip some of the following tasks, but we don’t recommend it because it’ll just make things harder for you in the long run (and may well result in you getting a worse deal).

• Get your business valued. How you value your business obviously matters, but you’re obviously biased and likely not qualified to carry out an accurate business valuation. We can carry out such a valuation for you, of course, so get in touch if you’re ready to get the ball rolling. You’ll ultimately need to decide what offer you accept, but we can ensure that you don’t make the not-uncommon mistake of accepting a lowball offer.
• Identify your goals. Yes, your primary goal is to sell your business, but what would the ideal outcome be for you? If you’ve lined up a comfortable retirement and already have enough savings to cover your needs, you might not be too concerned about holding out for the best price. You might prefer to wrap up the deal as quickly as possible so you can move on. If you’re planning another business venture, on the other hand, your main goal may be to make as much money as possible so you can move ahead with a big budget

Furthermore, you may care about the future of the operation you’re selling. When you’ve put time and effort into building your own business, it’s understandable to be invested in a way that goes beyond profit and loss. Would you be comfortable selling to someone with plans to gut the company and fire all the staff? Or is it important to you that your original vision for the business is carried forwards?

• Decide what you’re selling. Selling a business doesn’t mean selling everything about it. You could sell the operation but retain the brand name, or sell the digital assets and keep the physical assets. If you have a strong location and want to start fresh with a new business, for instance, you could do the latter to make some start-up money.

You should also think about what you’ll accept in return, because you don’t need to exchange for money outright. You might want to ask for a selection of shares in return, or a stake in the seller’s company. If you’re willing to play the long game, you could even request a long-term payment plan where you charge a higher price overall but don’t need the entire sum to be paid immediately.

• Set your requirements. With the previous steps done, you can set your requirements for the sale. Is there a key deadline you want to hit? A minimum offer you’ll consider? A type of company you won’t consider selling to? You might stipulate that a buyer must retain at least a certain percentage of staff, or commit to maintaining the brand you’ve cultivated for a set number of years. You get to set the terms, so think carefully.

As you do so, of course, you must be aware of how much leverage you have. Even if your business is undeniably a hot commodity, you can only be so demanding before potential buyers start to lose interest. Later on in the process, though, if you’re finding that you’re not getting great offers, you can simply change your requirements.

• Assemble your paperwork. When you reach the point of starting a sale, your arranged buyer will want to inspect as much as they can to probe for reasons to call it off or renegotiate the price. Due to this, you should prepare by rounding up everything from your company’s financial history to a full list of the assets you’re offering in the deal structure. In doing so, check that everything is in order with no conspicuous omissions.

You don’t want to give an eager buyer any reason to reconsider their position during the sale, because high-value purchases can make even the most interested parties anxious (and a small business can still be a high-value purchase). If they lose their nerve, you’ll end up needing to put your business back on the market in a position of relative weakness, as perceptive entrepreneurs will want to know why.

2: List your business for sale

Now that you’ve finished with the groundwork, you can move on to the process of getting your business listed for sale. This is all about efficiency and choosing how to market your business most effectively, helping you to achieve your overall goals.

• Assign a broker. If you’re determined to handle the listing of your business in-house, you can do that. It just isn’t usually a good idea because working with an expert business broker frees you up to focus fully on your professional commitments. Business brokers have the experience and knowledge to get optimal results: they know what buyers prefer, how to present financial statements and other financial records, and how to most attractively frame most businesses. Building on our valuation, we can deal with this for you, and ultimately take you through the rest of the sale process.
• Select a fitting list price. It’s important to think about what amount you should list as your opening price. There may be an extended negotiation process ahead, so you should aim high from the outset and expect to field lower offers. Alternatively, you could avoid listing a price at all, offering that information only upon request. It depends on how secretive you want to be (secrecy isn’t typically a concern for the sale of a small business, but it can be in certain circumstances: we’ll talk more about this later).
• Set out relevant media. If you have corporate premises that will be included in the sale, you need to take a wide range of high-quality photos that display them in the best possible light. While an interested party should eventually want to view the property in person, the images they see early on will heavily influence how they view it.

And if you have any other media to build up the value of your business, set it out here. It could be an industry award you’ve won, a podcast you’ve been mentioned on, or even a virtual 3D tour of your premises (it might sound odd, but such a thing brings a lot of value to the table, particularly when people are unable or unwilling to visit in person yet).

• Offer comprehensive data. Key to a business sale is having all the information ready for a potential buyer to review, and that means including as much as you can in the copy of your main business listing. As noted, your business broker can help you get the presentation right (you need easy-to-read graphs, for instance). Due diligence will require a buyer to pore over the details, so make things easy for them right away.
• Identify viable paths ahead. While it isn’t your job to help a buyer lead the business to great success, it’s certainly going to help you make a sale if you can offer some useful pearls of wisdom about possible futures for the company. Where do you foresee it going? What could or should a buyer do with it after completing their purchase?

If you end up attracting offers from inexperienced entrepreneurs, you may find that your guidance proves immensely appealing. The successful bidder may want to start off by using your business planning efforts to get the operation settled before they start trying to make any major changes. It’s also a show of goodwill to offer up some core tips.

• Decide your marketing stance. How do you want to market your business? Do you want the listing plastered across every marketplace, with all the details there for all to see? Or would you rather keep things relatively quiet? The latter may sound odd because it’ll limit the offers received, but there are two reasons why you might do it:
• You want to avoid business disruption. The stability of your business will impact its perceived value, and letting your employees know that you plan to sell could result in lost morale and diminished productivity. It’s more responsible to keep them apprised of proceedings, of course, but in the end you may deem it more important to do what’s best for you and your finances.
• You want to be highly selective. While it’s true that having an open listing will generally drive attention and offers, having a listing on the market for a long while can lead people to assume a lack of interest (even if it’s due to your strict requirements). If you want to be choosy about the buyer you select, it may be better to keep the listing somewhat quiet for a while.

3: Choose the right offer

With your business now listed for sale (even if only through selective closed marketing), you should start to accrue offers. Note: if you’re not getting any offers, there’s clearly something very wrong with your listing or your value proposition, so revise things accordingly. Once you have a solid lineup of potential buyers, you can move on to the following steps:

• Investigate top contenders. If you’ve picked up a lot of offers, you won’t have time to pore over the details of each one, but you should look closely into the most likely contenders. At a minimum, you should attempt to confirm their legitimacy. If you put time and effort into trying to close a sale only to discover that the offer was never above board, you’ll end up frustrated and not overly enthusiastic about restarting the process.

You can do this yourself if you’d like, largely by researching the entrepreneurs or brands online to gauge their reputations. Are they known for operating in good faith? Do their financial situations seem to be solid? If you find a lot of criticism of a bidder, of course, it might be a sign that you should avoid selling to them.

• Review pros and cons. One contender might have the cash to get through the sale at a rapid clip, letting you wrap things up and move on quickly. Another might offer the same amount and be interested in hiring you as a business consultant for some practical advice once the sale is finished. Considering the scenarios we looked at while covering your goals and requirements, this step can take some time (plus major contemplation).
• Negotiate as needed. The first offer isn’t generally the final amount. And while sellers can often be haggled down, you may be able to negotiate a better offer once you’ve fully pitched your business to an interested party. What might they budge on? If they’ll agree to keep key employees, might they keep others as well to sweeten the deal?

How careful you need to be will depend on how many offers you have and how eager you are to finish the sale. If there are various bidders, you can pit them against one another: when you’re selling a small business, this can make a big difference in the final price. Business brokers can obviously help you with getting this right.

• Handle due diligence. Once you’ve selected the best offer and decided to go with it, you need to notify your solicitor (or broker, if it offers a full service) so they can get the ball rolling. They can also give you some last-minute guidance in case you have any doubt about the process, checking that you have everything lined up correctly.

The first move in the actual sale is to sign a purchase agreement that sets out the terms of the sale (complete with everything you’ve negotiated) and puts everyone on a clear legal footing. This will allow the buyer to proceed with due diligence. This process (by which they double-check everything to avoid disaster) may be smooth if you’ve been upfront with everything and concealed nothing from them, but you can’t know that ahead of time, so be ready for this part to take a while.

4: Proceed with the sale

Assuming you’ve made it through due diligence with no issues, everything’s looking good and it’s time to sell a business. This part can take a long time, so it’s key to get it right: keep in mind that we’re around for general consultancy. Here are your steps for getting things done:

• Agree on a timetable. This may be something you were firm about from the outset, but not necessarily. If you never discussed a clear timetable, this is the time to do it, even allowing for the fact that it’s incredibly hard to guarantee hitting a deadline. Anything from bank account problems to unexpected expenses can lead a buyer to require a delay, while it’s possible (though unlikely) that you may wish to request an extension.

Instead of looking at particular dates, then, you might prefer to agree on a broad timetable. You could target the end of the year for getting everything wrapped up, allowing a lot of flexibility while ensuring you’re working towards a shared goal.

• Provide any requested info. Even after due diligence has concluded, the buyer will be on the lookout for reasons to be concerned. Couple that with the legal requirements and they (or their representative) will probably reach out to you on many occasions with questions about your operation. Your task is to give out all requested information as expediently as possible. The longer you take, the longer the process will become.
• Arrange an in-person handover. When the sale is coming to a close, you shouldn’t settle for wrapping things up with a completed digital contract and a police email. If possible, you should arrange an in-person handover during which you can wish the buyer well, hand over anything that’s still owed to them, introduce them to any remaining employees, and generally show consummate professionalism to bolster your reputation.
• Maintain good relations with the buyer. On the topic of your reputation, you shouldn’t simply forget about the entire thing once your sale is completed. Even if you’re retiring, you might want to hear about the progress of the business (or be consulted about it on occasion), and forming a strong relationship with the buyer will help with that.

If you’re moving on to bigger and better things in the business world, of course, it’ll help significantly to have the buyer of your business speaking favourably about you. And if you end up trying to sell another business down the line, a hearty recommendation from a previous buyer will make it much easier for bidders to see you as trustworthy.

For more guidance on how to sell your business, get in touch with one of our advisors at enquiries@christie.com for tailored advice on how to get the maximum return for the business that you want to sell.