Page 14 - Wealth of Experience - Selling a Business 2019

FIT FOR PURPOSE –

READY TO SELL?

When selling up, a lot of effort goes in to Extra investment in your company’s assets before the sale
preparing the business before the deal is can result in a higher sale price. Generally, investing over
done. Focussing on improving areas that time out-weighs the cost of implementing the changes in
the first place. It’s important to identify any potential levers
are important to buyers will pay off in to value and, where there’s an upside, invest accordingly.
the long run.
Ensuring that a business is in the right state for a sale
Depending on the sector in which the business operates, takes time and may require the help of a broad range
there’s a variety of different value drivers. Here are a few of advisers including accountants, Corporate Finance
general pointers that apply across the board: specialists and even IT consultants in today’s, data

Proven results sensitive, digital world.
Buyers don’t generally pay for potential. Attempting to A focus on financial performance and
convince buyers that you’re sitting on a potential gold mine leadership teams
doesn’t usually result in a high sale price. Usually, business When selling a business, the actual timing of the sale
owners take the time to generate a strong revenue stream is dependent on a wide range of circumstances, both
before eventually going ahead with the sale. personal and concerning the business’s future. Our survey
This doesn’t mean that buyers don’t want to see the found that financial performance and management team
potential for future growth but they will want to invest in readiness were the two most commonly cited reasons for
something where their money looks secure. Demonstrating the timing of a sale. However, personal factors such as
the business’s profitability could mean cutting down on retirement and family tensions also provided an incentive
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any unnecessary expenditure ahead of the sale. to sell for 26% of respondents .
Preparing the management team

A great management team is critical to a business’s What factors affected the timing
success. Buyers know this. of your sale?

Having a very capable management team with strong
leadership qualities shows potential buyers that a business FINANCIAL
won’t be a ship without a captain. Buyers need to clearly PERFORMANCE 52%
see who will take the business forward and that they’re in
a position to make pivotal decisions without the owner.
If there isn’t a strong team in place, it can be a good MANAGEMENT
suggestion to hire some top-level talent. TEAM 52%
READINESS
Getting the assets in shape

The better a business’s assets, the more buyers will pay. PERSONAL 26%
Even having offices that look like they’ve seen better days (HEALTH/
RETIREMENT)
might detract from the value. Overall, sellers should try
to make the business look good. And this includes the
physical assets.
OTHER 21%
Asset valuation is increasingly complicated in modern day
businesses. Traditional, fixed assets such as machinery
and buildings are much easier to measure than intangible
assets like the talent in your staff, the company’s culture PRODUCT 10%
and its creative or intellectual property. It’s often intangible LIFE CYCLE
assets that give one firm the edge over another, especially
in the services sector.
MACRO- 10%
ECONOMIC

14 6 Wealth of Experience Report Q8