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.
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.
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. Free and with no obligation of course. Or you can attend one of our webinars where you will learn all about how we prepare and sell a business like yours.
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