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 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.