What to do when Someone Asks to Buy a Business You Own
When you’ve spent years of hard graft building a prosperous company with a strong brand, there’s perhaps no greater accolade than an approach from a fellow entrepreneur keen to buy a business you own.
In our work as corporate finance experts, we meet many business owners who have been approached by someone who wants to buy their business. In some cases, they were thinking about selling anyway. In others, it wasn’t on the cards yet but it’s given them food for thought and planted the question in their minds – “Well, is now the right time?”
Beware of flattery
It can be very flattering when someone likes what you’ve crafted so much that they’re willing to pay serious money to take the reins. However, while compliments are very welcome, they should always be taken with a pinch of salt because they can pull the wool over your eyes.
With that in mind, if you do decide you’d like to sell your business following a speculative approach, by all means go ahead but keep your wits about you…
Stranger danger?
If an enquiry to buy a business you own arrives out of the blue, the potential acquirer could well be an unknown entity so do some careful research using trusted networks and contacts who understand the market well. A corporate finance consultant such as one of the Entrepreneur’s Hub team will be able to help you get more insight and clarity around this.
Sometimes it’s difficult to tell if a prospective buyer genuinely has adequate funds and facilities in place to purchase your business. Seek professional help to determine whether they’re serious or whether they’re just kicking tyres to see under the bonnet of your business.
Practical tips
Being courted by someone who wants to buy your business can be a hugely exciting time, so we’re not trying to scaremonger or arouse unnecessary suspicion. It’s just smart to be vigilant when something as important as your business is at stake.
Have you been approached? Here’s some advice to help you avoid the common pitfalls so you can sell your business with peace of mind – and for maximum value.
- Don’t fall into the trap of being ‘romanced’ and give too much away, too soon. If the acquirer is keen, they’ll remain patient (so going at your own pace might even be a useful litmus test of how genuinely interested they are)
- Work with an experienced adviser from an early stage – because you probably haven’t sold a business before whereas they’ll have the knowledge and impartiality to ‘stand in the gap’ and negotiate the best deal for you
- Get a non-disclosure agreement (NDA) arranged before meeting potential acquirers, to protect confidentiality. Make sure it’s yours, not theirs, and get it signed by both parties (if you need an example, get in touch with us)
- Carefully prepare an information memorandum – a sales document highlighting the opportunity in more detail, under NDA
- Collate future forecasts to show buyers the scope for business growth over the next 1-3 years but never give the full financials at this stage
- Open the option up to other acquirers – if you decide it’s the right time to sell your business, don’t be afraid to invite additional interest, not just from the buyer you were approached by in the first place. You want to be confident you have got true market value for your business (plus, it gives you a plan B if another interested party drops out of the race)
Selling a business is a complex process, as Andy Fewtrell, Chairman of Up and Under Group discovered:
“Entrepreneurs Hub helped me to prepare and sell my company. Selling a company is not easy, it’s emotional, and there’s work to do. I’m so pleased I engaged the Entrepreneurs Hub team to navigate and support us through the process.”
Who buys your business matters immensely, so it’s a process that must be skilfully driven. After some careful analysis of buyer credentials early on, you’ll be able to progress to the next stage with your chosen acquirer with true confidence. Then, once you’ve negotiated and procured offers and followed due diligence with the help of your corporate finance expert, it’ll be time to secure a deal that meets your exit objectives – leaving you to enjoy the next chapter of your life.
When someone asks to buy a business you own and you need expert guidance, you’ll know you’re in safe hands with Entrepreneurs Hub. Find out more about how our central principles and proven approach can help you achieve your desired goals and aspirations by giving us a confidential call today on +44 (0) 845 067 8678 or emailing info@entrepreneurshub.co.uk
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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.