Three More Questions you Must be Able to Answer Before Deciding to Sell Your Business
A few months ago, we posted a blog that posed “Three important questions you must be able to answer before deciding to sell your business”. There are, of course, many questions that entrepreneurs need to get to grips with before they make one of the biggest decisions of their lives. Here are three more questions, and some useful guidance in how you can find the answer.
When should I sell my business?
There are a couple of ways to interpret this. Firstly, when in the lifecycle of my business should I sell it? Secondly, does the time of year or world events have an impact on the timing of a sale?
In terms of lifecycle, it won’t surprise you to know that value is positively impacted by growth. So, a company that is growing will be in better shape than a company that is in decline. That’s not to say a company that is static or declining isn’t saleable, but you might want to consider if there is anything you can do to boost sales or highlight potential growth before you sell.
Recent events have almost certainly raised some questions around whether it is right to sell now or wait for things to settle down. In our experience though this concern is largely unfounded. A good business will sell, regardless of what else is going on. The only exception is if world events have a direct negative impact on your business, but even then, this does not mean your business isn’t saleable particularly if the effects are temporary.
Selling your business is a process, not a one-shot deal. Acquirer profiles and seasons will change, and a good sales process will adapt to accommodate this. So, the question of when to sell really does come down to when you, as the owner, are ready to take that step.
Who should I tell that I am thinking of selling my business?
Most business owners are nervous about this question. On the one hand, it seems inadvisable to tell anyone, but on the other, this is a big decision, and you need to talk to some people you trust.
We looked at this question in more detail in our blog on confidentiality; when to release information and who to is a big part of the planning we do with our clients. But what about before you decide to sell? You know best who you can trust and who you need to talk to, but here are some thoughts from us.
- The further removed from the business the better. I am sure you have very trustworthy people working for and with you on the business, but the closer they are to the business the more impact your decision to sell will have on them. They may not go spreading your secrets, but they may well be unable to avoid bringing their own agenda into the discussion.
- Advice from your peers is preferable. If it’s advice you are looking for, you ideally want to talk to someone who understands the position you are in. That would be other people who own, or have owned, a business. As well intentioned as they may be, it is rare that someone who hasn’t been in your shoes will give you the best advice.
- Talk to the experts. Entrepreneurs Hub are always delighted to speak to business owners on a confidential and no-obligation basis about their options. We make no charge for an initial consultation and it’s a great way to help you think through some of the issues.
What do I want to happen to the business, staff and clients after I sell?
This will be a more important factor for some business owners than for others, and a lot of it depends on the nature of your business. But for most of you there will be, to some degree, a concern over what happens next for the people who have helped you get the business to where it is today. In fact, it may be one of your strong reasons to sell, recognising their future is better with the fresh investment and energy of a new owner in the driving seat.
The reason it is worth thinking about before you decide to sell is that it may have some bearing on how you approach the sale, whether or not you include competitors in the approach, and how long you stay involved post-sale, if at all.
If you are thinking about selling and would like our help in answering any of these questions, please get in touch and we will arrange a free, no-obligation virtual business review.
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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.