If the time has come and you’re ready to hand over the reins to a new owner, here is a shortlist of tasks you’ll need to complete in order to prepare your business for an acquisition.
Get your books in order
Your buyer will want to do a complete lengthy due diligence over your business, and it will be essential to have your books in order in preparation for this.
If there are any discrepancies in your books or it’s not easy for a buyer’s legal team to complete the due diligence process, it might spook them out of the sale altogether.
Your accounting team should be experienced enough to prepare a business for a sale, and will know exactly what a potential buyer is likely to be looking for.
This process will help you to determine a reasonable selling price, before you advertise your business for sale.
Make your business more sustainable
A typical method that buyers use to determine their offer for a business is the following: assets + annual profits x multiplier
The multiplier will be the main point of negotiation between parties and will be based on opinions about the practice’s sustainability and potential for growth.
Business with good potential for growth typically have lots of clients and aren’t too reliant on a small number of clients for a large percentage of their revenue. The owner will typically spend a lot of time recruiting new clients and may even be training younger staff to take on major roles.
Ideally, these processes would start as soon as you take over a business. If this wasn’t the case, it could be worth performing these tasks for at least a year before you put your business up for sale.
Make a decision about your after-sale role
Before putting your practice up for sale, it’s important to be clear about what you’re willing to do after the sale.
Many successors will want to keep you on board as an advisory role for their initial months at the head of the company, either as an employee or as part of a freelance advisory agency. You’ll need to decide which, if either, of these options will be suitable for you, plus how long you’d be willing to do them for. Do this before you start looking for a buyer and discuss it early in negotiations, as it can often prove to be a stumbling block. You’ll be hard pressed to find a buyer who doesn’t want you advising them at all, so bear in mind that your exit from the company is likely to be a transitional one.
Get ready to find a successor
Finding a successor for your business is rarely a quick process, unless you have a ready-made replacement already working for the practice.
If you want to ensure the future prosperity of your company for the sake of your employees and clients, you’ll need to prepare yourself for a lengthy search to find the right candidate to acquire it from you.
Succession Link can make the process of finding a quality buyer much easier. Our website has an extensive database of experienced individuals looking to grow their financial process. By signing up to our database, you can connect hundreds of candidates, communicate with them and discuss their credentials. Click the link to learn more about how Succession Link allows you to easily connect with these professionals and strike a deal.