Considering Selling Your Business? You’re Not Alone
I read a statistic recently that claimed over 60% of business owners are considering selling a business in the next five years. It’s an interesting statistic that highlights a trend we have noticed in our own discussions with business owners. The last 18 months has been challenging for many, and a time to reflect for all of us. Whether 60% is entirely accurate or not, we know that a lot of business owners will be asking questions right now: How much is my business worth? How to sell a business? Where can I get help to sell my business? Let me just take a few minutes to suggest some of the answers to those questions. If you are one of the many thinking about selling, I hope this helps.
Valuation:
There are many ways to value a business, but most of them boil down to accountancy and mathematics. Multiples applied to historic turnover or profit figures. But we all know that there is more to your business, and its value, than just past performance. Any acquirer wants a well-performing business, but they are also interested in future growth, diversification, skills, markets, clients, technology and a host of other things that a simple multiple of historic EBITDA fails to take into consideration. If you want to know what your business is really worth, you need to take a broader perspective. And if you want an acquirer to pay what it is really worth, you need to show them that you understand why they should.
How to sell:
There are two broad categories of approach when it comes to selling – active, or passive. A passive approach might be to simply wait for someone to get in touch an make an offer, or a slightly more intentional version is to advertise your business for sale on one or more of numerous broker lists out there. At the other end of the spectrum is the approach we favour. An active approach to selling your business is the only way to ensure you can be certain that you have found the best acquirer and got the best value available for your business. By identifying and approaching strategically selected acquirers, you maximise the most important aspect of any sales strategy – choice. If you have a choice from a number of good options then you hold all the cards.
Getting help:
If we are to see a strong rise in the number of business owners selling their businesses in the next 5 years then, like in any market dynamic, we are going to see it becoming more favourable for the acquirer. This will make it even more important to get good advice and solid support from a trusted corporate finance adviser like Entrepreneurs Hub. Of course you’d expect me to say that, but I think my reasoning is fairly easy to defend. Firstly, any business that is to be sold needs to stand out from the crowd. A company like ours can help accentuate the things that make your company unique, and also work with you to build those areas of uniqueness so that you stand head and shoulders above the rest. Secondly, once you have caught someone’s attention, you need a blend of experience and expertise to see it across the line. If you are one of those business owners thinking about selling, we’d love to speak to you.
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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.