Although we hear a lot about startups, it’s not every day we hear about leaving a business.
There are many reasons why people consider leaving a business. Whatever the reason, it’s always good to make sure that you achieve your business goals and make a reasonable profit on the sale.
Selling your business on the open market is the most popular option for small businesses. These sales involve two main types of buyers:
– Individual buyers who want to be small business owners
– Larger companies interested in acquiring your business as part of this existing company (often referred to as strategic buyers).
Either buyer can be a great opportunity for a seller, but managing the process can be extremely difficult. Therefore, you should have a professional team on your side, including a business broker, an experienced lawyer and an accountant.
In the first case, an individual buyer is looking to buy a business to replace an income or become an entrepreneur. Typically, this will be someone with relevant experience but not directly running the type of business you currently operate. This is a good thing because then they will pay for your expertise and goodwill. And another benefit is that the individual will often continue to run the business you started and potentially retain key employees.
In the second case, selling your business to companies interested in acquiring your business means that they intend to make it part of their own company or part of an expansion plan. their. It is an ideal selling option for high-growth businesses with £1 million a year in revenue. Large companies can spend more money than an individual, and they can gain some advantages of scale, thereby increasing the value of your business.
After the sale, your business may not look exactly like it, as it could be converted into a subsidiary or division of the acquiring company. Acquiring companies may also want you to go ahead and manage your business – often called ‘monetization’ where the business must hit growth milestones. These transactions can be very complex and it is important that you are represented.
Business partners share their checklist to guide those looking to sell on the open market:
- Decide what you want from the discount
- Identify and manage any transaction disruptions
- Put your finances in order
- Get Price Reviews
- Enhance your business value
- Decide how to market your business
- Prepare business for handover.
Regardless of your exit strategy, it is important to conduct a sale with the help of a trusted broker or business advisor. Simply coining the proverbial ‘for sale’ can greatly affect the value of your business, leaving employees, customers and suppliers out. Brokers and business advisors keep your purchases confidential, provide the highest level of expertise in valuing your business, and ensure you get the best price possible .