Preparations for Sale that Truly Make a Difference
A whole sub-industry has grown up around corporate transactions. Sometimes this preparation activity is called ‘grooming’ for sale. I went through a phase in my life where I thought that all such activity was irrelevant. This prejudice was fed by the numerous horror stories I came across. I recall a client in Cheshire telling me about spending £250,000 on grooming his business. It turned out that none of the potential purchasers his accountants identified cared about any of the changes they had themselves initiated! This provides me today with my first key point. “Do not make changes to the business that a purchaser does not care about, or that they can institute more cheaply than you.” My second point follows rapidly on: “Find out what a prospective purchaser will care about and do that!
Do not make changes to the business that a purchaser does not care about
A simple negative example of what I am seeking to convey is that of Credit Control. Early in my career, I worked in an excellent firm that had poor credit control. Some attempts were made to improve over a couple of years, but it was sold with that still a real issue. The multinational purchaser had it sorted in a month – by just dropping in their own highly effective systems. In conversation with the new General Manager, he told me that the issue was part of the attraction of the company. What was to them a minor adjustment brought rapidly accelerated payback. However, if all likely buyers for our firm had instead been private companies with limited resources, such a fault would probably have left it unsold. Proper preparation thinks into the shoes of the most likely buyers.
Find out what a prospective purchaser will care about and do that
Much later I was working with a logistics firm to establish their ‘value proposition’ for acquirers. They were quite negative about their proprietorial load management software. I had to fight to keep it on the list. The eventual buyer sneered at the trucks, the management, and the customer base, but went all quiet when evaluating the software. It turned out that theirs had cost £2m and still barely functioned! The target company was reversed into the much bigger operation and assumed its control functions! So, next points: “Some of your weaknesses are strengths. Some of the things to which you give little value, matter a lot to others.”
Buyers buy future results by turning their back on unmanaged risks
However, what people will never buy are unresolved court cases, warranty issues, untried technology, shoddy HR practices, etc. “Buyers buy future results by turning their back on unmanaged risks.” Nobody wants to buy risk. Acquirers can produce enough of that themselves without your contribution! All company preparation for sale should contribute to risk mitigation. By the way, perceived risk is as bad as actual risk. Much of your preparation may need to be around making sure that there are no misconceptions. Large companies find it particularly hard to evaluate SME customer bases, for instance. They look for big names familiar to them and can baulk if they are not there. So, do the hard work of showing how your own client base will work to their advantage – or improve it!
Some of the things to which you give little value, matter a lot to others
I do not understand today why I thought that preparation for sale was non-vital, other than the very real abuses of twenty years ago. (Advisors who would lose their client if the client sold, constantly finding further areas to groom – at a hefty daily rate!). Most crucial is absolutely up-to-date input as to what matters and what does not.
If you’d like to find out more about mitigating the risks and selling your business for the right price and best terms, please contact us.
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FAQs – Selling your company
What size of businesses do you work with?
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What sectors do you specialise in?
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What about some free advice?
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Can I do it myself?
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How long does the process take?
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Nullam cursus lectus nec leo ultrices malesuada. Donec euismod sodales arcu quis lobortis. Mauris vel nisl sollicitudin, efficitur enim non, lobortis nulla. Aliquam lobortis dui a turpis fringilla, eu fermentum augue rutrum. Quisque sit amet aliquam erat. Aenean eu augue felis. Vivamus sodales sollicitudin urna, sit amet fermentum dolor imperdiet ac.
Cras in purus ut eros semper interdum vitae id orci. Suspendisse pellentesque ligula ut lorem ornare malesuada.
Lorem ipsum dolor sit amet
Lorem ipsum dolor sit amet, consectetur adipiscing elit. Sed hendrerit risus vel faucibus tristique. Suspendisse ac gravida nisl. Duis ac libero et est malesuada dapibus. Aliquam id libero vel nisi convallis lacinia.
Nullam cursus lectus nec leo ultrices malesuada. Donec euismod sodales arcu quis lobortis. Mauris vel nisl sollicitudin, efficitur enim non, lobortis nulla. Aliquam lobortis dui a turpis fringilla, eu fermentum augue rutrum. Quisque sit amet aliquam erat. Aenean eu augue felis. Vivamus sodales sollicitudin urna, sit amet fermentum dolor imperdiet ac.
Cras in purus ut eros semper interdum vitae id orci. Suspendisse pellentesque ligula ut lorem ornare malesuada.
Lorem ipsum dolor sit amet
Lorem ipsum dolor sit amet, consectetur adipiscing elit. Sed hendrerit risus vel faucibus tristique. Suspendisse ac gravida nisl. Duis ac libero et est malesuada dapibus. Aliquam id libero vel nisi convallis lacinia.
Nullam cursus lectus nec leo ultrices malesuada. Donec euismod sodales arcu quis lobortis. Mauris vel nisl sollicitudin, efficitur enim non, lobortis nulla. Aliquam lobortis dui a turpis fringilla, eu fermentum augue rutrum. Quisque sit amet aliquam erat. Aenean eu augue felis. Vivamus sodales sollicitudin urna, sit amet fermentum dolor imperdiet ac.
Cras in purus ut eros semper interdum vitae id orci. Suspendisse pellentesque ligula ut lorem ornare malesuada.
Are you a business owner looking to sell your company?
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 using a multiple of its profit, usually EBITDA or adjusted net profit. The multiple depends on factors such as growth potential, recurring revenue, customer diversification and management strength. Professional valuation provides a realistic price range and helps position the business effectively for buyers.
Determining your business’s value is more than just calculating a number it’s complex with key factors, that said the basic equation is actually quite simple. Read more…
How long does it take to sell a business?
Selling a business in the UK typically takes between six and nine months from preparation to completion. The timeline depends on business readiness, buyer demand and the complexity of due diligence. Early preparation and clear financial reporting can help shorten the process.
When is the best time to sell a business?
The best time to sell a business is when it is performing strongly, growth prospects are clear and you are not under pressure to sell.
Business owners often achieve the strongest outcomes when:
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Profits and revenue are growing
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Financial records are clear and well prepared
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There is visible future growth for buyers
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The owner has planned the sale 12–18 months in advance
Market conditions can also influence valuations. Strong buyer demand, sector growth and favourable economic conditions can increase acquisition activity, but a well-prepared business can attract interest in most markets.
Deal activity often increases during spring and autumn, although transactions complete throughout the year. In practice, preparation and business performance usually matter more than trying to perfectly time the market.
Ultimately, the best time to sell is when both the business and the owner are ready, with the company positioned to demonstrate strong value to potential buyers.
Do I need an adviser to sell my business?
Many business owners choose to work with an M&A adviser to manage the sale process. Advisers help value the business, approach qualified buyers confidentially and negotiate terms. This structured approach can increase the likelihood of achieving a higher value and a successful transaction.
How is confidentiality protected during a sale?
Confidentiality is protected through controlled information sharing, anonymous buyer approaches and strict non-disclosure agreements. Potential buyers receive limited information initially and must sign an NDA before any sensitive details are released. Business owners approve prospective buyers and maintain visibility over all documentation throughout the process.
How do I value my business before selling?
Valuing a business before selling usually involves analysing profitability, identifying valuation multiples and assessing key value drivers such as recurring revenue and customer concentration.
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…