10 More Tips from Business Owners that Sold their Company (Part 2)
If you are a regular reader of our blogs, you will recall Part 1 of this series. Whenever an owner sells their business, we always ask what advice they would they give their peers in a similar position.
Here are tips 11 -20 provided by owners and entrepreneurs across the business spectrum.
- Have options on who could buy your business
You need to create choices by having more than one offer on the table. We know, if our clients have attracted multiple interested parties, we are in a much stronger negotiation position. Not only does this provide you with choice, it also creates competition and the opportunity to negotiate an increase in the value of your business. Most importantly potential buyers are less likely to chip away at the price if they know there are other suitors.
- Stick to the initial offer, don’t drop and don’t be scared to say no
Most buyers will try to lower the price, especially as you move into the due diligence process. The key to preventing this is to make sure you and your business are well prepared prior to going to the sale stage. It’s less likely any issues will come out of the woodwork during the due diligence phase and therefore less likely to give the buyer an opportunity to chip.
You need to negotiate hard but fairly and don’t be scared to say no. If you have the options you can do it with confidence.
- Make sure your company runs without you
Buyers prefer businesses with strong management teams who can run the business when you are not there. If your business is heavily dependent on you, it will be perceived as a possible risk. It doesn’t necessarily mean you won’t sell it but the buyer may want to tie you in for a long period (which may not be what you want).
- Go with your gut feeling
In our experience business owners don’t always accept the highest price, the reason being the structure of the deal may not work for them or the culture in the buyers company could be very different from yours. When you have multiple offers, go with your gut feeling, the deal you feel is right for you and your business.
- Buyers want certainty – secure contracts and recurring revenue wherever possible
Establish recurring revenue contracts. Sales drive successful businesses and you should always consider ways to consistently increase these along with revenue, paying special attention to recurring revenue sources that generate gross income for the new owner from day one. Building recurring revenue streams and securing any pending customer or vendor contracts will give buyers added comfort that they will have a consistent flow of future revenues.
Businesses with profitable contracted revenues are highly sought after and can significantly increase the value of your business.
- Keep unrelated businesses separate
If you have other interests, unless they are complementary to your core business, keep them separate or you may complicate things and delay your deal. For example, in the past we have seen business owners running their small property portfolios through their business. If I am looking to buy your creative agency I probably don’t want the 2 buy-to-let flats that are currently owned by it. Keep it simple.
- If you feel now is the optimum time to sell – don’t hang about thinking it will get better
Recently, I was listening to an owner who said he wished he had sold 2 years earlier. His business hit a recession and he could see 10s of thousands being wiped off the value of his company every day. Selling businesses is a little like share dealing – some sell too early others sell far too late. The best time to sell a business is when you don’t need to and when you know the potential proceeds will allow you to live a lifestyle that is equivalent or better after you have completed the sale.
- Whilst you are selling, run your business like the deal might fall through. It might!
If you have decided to sell your business, it’s likely to be the most valuable asset you own. An alarming statistic is that over 75% of businesses fail to sell at the first attempt using traditional avenues. There are many reasons a sale can fail and it could be as simple as the owners aspirations not being met. In many cases, it’s because the business owners have not prepared properly.
Engage with an experienced broker who can manage and drive the process on your behalf while you keep a close eye on the business. A good broker will be able to minimise the impact the sales process has on you, and the business, and most importantly they won’t take you to market until they are reasonably confident you will sell.
Whatever you do, don’t fall into the trap of taking your eyes off the business. You need to continue running it as you have successfully been doing for years. The better the business performs during the selling process, the more likely you will be in getting it sold.
- Preparation is key to success
If you were selling your car, you know that you are likely to sell it quicker and achieve a good price for it if the vehicle is well serviced and valeted beforehand. It is absolutely no different for a business. Preparation is key if you want to maximise value, sell first time and move things quickly.
- When you’ve done it, move on and never look back at what might have been. It’s too late to worry about it.
It’s interesting, I know exactly what this owner meant. If you were happy with the deal when you sold it, focus on that and not what could have been. Remember you can’t change the past, only learn from it, but we can change the future.
We trust you have found these tips helpful.
I would like to take this opportunity to thank those business owners for sharing their insights about what they learnt through the process; and wish them all best in their new life as an owner who sold up.
Wishing you all every success
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FAQs – Selling Your Company
How do I sell my business in the UK?
Selling a business in the UK typically involves preparing financial information, obtaining a valuation, identifying suitable buyers and negotiating the terms of a sale. Most owners work with an M&A adviser to manage the process confidentially, approach qualified buyers and maximise the value achieved.
At Entrepreneurs Hub, we talk about five key areas that make the difference between success and failure when selling your business. Read more…
What is my business worth?
A business is typically valued by applying a multiple to its sustainable profit, often EBITDA or adjusted net profit. The appropriate multiple depends on factors including growth, recurring revenue, customer concentration, management strength, owner dependency, market conditions and buyer demand.
Determining what your business is worth involves more than applying a simple formula. Use our Business Valuation Calculator to obtain an initial valuation range, or read our simple business valuation guide to understand the factors buyers consider.
How long does it take to sell a business?
Selling a business in the UK typically takes around 12 to 18 months from initial preparation to completion, although some transactions may be quicker or take longer. The timeline depends on business readiness, buyer demand, deal complexity, due diligence and how quickly the legal terms can be agreed.
Preparing accurate financial information and organising key documents in advance can help reduce avoidable delays. Read our complete business sale timeline to understand what happens at each stage.
When is the best time to sell a business?
The best time to sell a business is usually when it is performing strongly, its future growth is clear and you are not under pressure to complete a sale. Buyers are generally more attracted to businesses with rising or stable profits, reliable financial information and credible opportunities for further growth.
Business owners are often in a stronger position when:
- Revenue and profits are growing or consistently strong
- Financial records are accurate and up to date
- Future growth opportunities can be clearly demonstrated
- The business is not overly dependent on the owner
- There is a capable management team in place
- The owner has started preparing well in advance
Market conditions can also affect buyer appetite and valuation. Factors such as sector growth, access to finance and competition between buyers may support stronger deal activity, but preparation and business performance are usually more important than trying to identify a perfect month to sell.
Ultimately, the best time to sell is when both you and the business are ready, and the company can demonstrate sustainable performance and future value to potential buyers.
Use our Exit Readiness Tool to assess how prepared your business is, or read our guide on when to sell your business for further guidance.
Do I need an adviser to sell my business?
You are not legally required to use an adviser to sell your business, but many owners appoint an experienced M&A adviser to help manage the process. An adviser can prepare the business for sale, identify and approach suitable buyers confidentially, coordinate negotiations and support the transaction through due diligence.
The right adviser can also help create competitive tension, protect your time and reduce the risk of avoidable mistakes. Read our guide to choosing the right business sale adviser to understand the different types of support available.
How do I prepare my business for sale?
Preparing a business for sale involves strengthening its financial performance, reducing risk and making sure it can operate successfully without heavy reliance on the owner. Buyers will also expect accurate financial records, clear contracts, organised documentation and evidence of future growth.
Preparation should ideally begin well before approaching the market, giving you time to address weaknesses that could affect value or delay the transaction. Use our Exit Readiness Tool to assess how prepared your business currently is.
How is confidentiality protected during a sale?
Confidentiality is protected through controlled information sharing, anonymised buyer approaches and non-disclosure agreements. Potential buyers usually receive limited information at the start of the process and must sign an NDA before commercially sensitive details are released.
Prospective buyers should be assessed before receiving further information, with documents shared gradually according to their level of interest and credibility. A well-managed process also allows the business owner to retain oversight of who is approached and what information is disclosed.
What documents do I need to sell my business?
The documents needed to sell a business commonly include financial accounts, management information, forecasts, customer and supplier contracts, employment records, tax information and evidence of intellectual property ownership.
Buyers may also request details of property, insurance, legal disputes, regulatory matters and company ownership. Organising this information before due diligence begins can reduce delays and help maintain buyer confidence. Our Business Sale Due Diligence Checklist explains the main information buyers are likely to request.
What’s the quickest way to sell a company?
Selling a business quickly is possible, but speed shouldn’t come at the expense of value or deal security Read more…
What’s the best way to sell a business online?
Yes, you absolutely can sell a business online. Many platforms specialise in connecting business sellers with buyers. Read more…
How can I increase the value of my business before selling?
You may be able to increase the value of your business by improving sustainable profits, developing recurring revenue and reducing reliance on individual customers or the owner. Buyers also value capable management teams, reliable financial reporting, scalable operations and clear opportunities for future growth.
The earlier you identify the factors affecting value, the more time you have to make meaningful improvements. Use our Business Valuation Calculator for an initial indication of value and our Exit Readiness Tool to identify areas that may need attention.