Selling a business: It's all in the timing

Successful business buyers also tend to be among the most successful sellers and the importance of an exit strategy cannot be overestimated when taking on a new acquisition. Ultimately, selling your business comes down to one thing: Preparation. The more time you invest in preparing your business for sale the better your chances of attracting top buyers.

Few people will deny the importance of having a plan in place for selling a business, but solid action takes long-term dedication when it comes to securing the best exit strategy. When discussing the best way of preparing a business for sale with the Business Sale Report's professional network, the one thing that crops up again and again is time.

Some of the most successful business people build an exit strategy into their business right from the word go, either when they first found it or first buy it. This plan will take into account both their own personal goals in life and the predicted development of the company. But these owners are constantly reviewing their plans as required. Time in this case means the lifetime of the company, its owner and the sector within it operates. Owners are adjusting their exit strategy as and when these situations change.

Others might not make any solid plans for a sale in place until an exit becomes a visible possibility. If as a seller you find yourself in this position, be aware that you will need an endless amount of patience and an incredible eye for detail to get you through the years of records, statements, contracts and contacts that you're going to need to look over before your company comes anywhere near to a potential buyer.

John Hatt, director of The Business Partnership, advises allowing plenty of time for this process: “The most successful tactic being used to get 'best price', is, and always will be, to have the business in the best possible shape for the sale … give yourself plenty of time to plan the sale, at least four years.”

He added that the sale process itself can take up to two years. Rupert Catell, managing director and owner of Turner Butler brokers, concurred, adding that factoring in the sheer length of time that a sale can take is one of the most important things for a vendor to get on top of. While some days will be busier than others, you can reasonably expect to spend at least half of your working time on the sale process.

He told the Business Sale Report: “Vendors really need to understand that a sale process is an incredibly stressful process, it's going to take up an enormous amount of their time, and if they are resentful of the amount of time and the demands that are placed on them by a purchaser at the beginning then the deal will fail.”


With planning comes honesty and disclosure. When it comes to coping with demands from a buyer, second to setting aside significant amounts of time, brokers recommend full disclosure. Be aware that any serious buyer will go to serious lengths to research your company, both before they make an approach and during the due diligence process.

Don't leave any surprises for them to find. If there are any problems you have been ignoring, now is the time to put aside extra hours to iron them out. Look carefully at your contracts, work out any disputes with suppliers and employees and make sure everything is in order as far in advance of a sale as possible.

Catell, who has worked on thousands of business sales - both as a broker and from a legal angle in his professional experience as a lawyer - explained: “What vendors don't understand very often is that the overriding emotion of a purchaser is one of fear, of being 'dudded' … If they start to uncover stuff that hasn't been disclosed to them at the beginning of the due diligence process or when it was first marketed then that completely undermines their belief and trust in the vendor.”

To put it simply, disclose any and all skeletons early on in the sale process; don't sit back hoping for the best. The best buyers – the ones offering the highest bids and the brightest potential future for a company - will do the most research. If you want to be in with a chance of selling your business to them, “put everything out on the table, explain it, put it into context” to allow everyone to go into a deal with their eyes wide open.

You can apply this approach to the figures and the physical assets of the business. It's worth drawing up documentation of the company's assets. Fix any minor issues with machinery, vehicles and office facilities and be careful not to discount intellectual property, which can be just as important, if not more so, than physical assets.

You're essentially looking to make life as easy as possible for the buyer; show them what your company has to offer and demonstrate that everything is in good order. If nothing else, this will stop them wasting time digging around for dirt that isn't there.

Make your time add up

Time really becomes essential when you're looking at the figures, it's all about the long haul at this point. Mr Hatt remarked on the necessity of planning a sale well ahead of the actual desired year of a handover: “We [as a broker] have seen over the years that maybe the latest set of accounts suddenly look so much better than the three or four previous years; this raises more doubts in a purchaser's mind for obvious reasons.”

He continued, noting that retirement sales are among the most common vendors to neglect this need for consistency that a buyer so highly values. It's not unreasonable for a buyer to want to see a full record of turnover and profit – or lack thereof – from the moment the business was founded. This is where companies that have had a long-term exit strategy will find themselves at a significant advantage. If you're really struggling to provide early records, consider talking to an accountant to see if they can help.

While financial figures are a good starting point, experienced buyers and sellers are aware that they aren't the be all and end all. There are other matters that will offer a strong insight into the future of the business. These include but are not limited to the strength and security of the supply chain; the security of the customer base and the evolution of the company's sector.

Nefarious behaviour

Experienced acquisition practitioners will have it on their radar that some sellers employ illegal methods to sell their business, such as falsifying figures. It's worth educating yourself about these practices, given that they do happen but they are not even worth contemplating as an option when selling, as John Hatt said: “With the law on disclosure being what it is, then any owner relying on Caveat Emptor - let the buyer beware - could be in serious trouble.”
A decent business with solid records of its activities presents a prize in itself. Do right by your original investment and set aside enough time to prepare your company and show it off to its best light without taking any dubious shortcuts.

Keep a clear head

Throughout the whole process, it's essential that you keep a critical view of your company. A seller's view of a business is naturally very difficult to that of a buyer - crucially, the buyer hasn't poured the same hours and years of effort into making it what it is today. What matters to them is the effort that is still to come and the work required in the future to get the business to where they want it to be. As part of this, Catell urge sellers to keep a professional slant on the whole process and appoint a full-time commercial solicitor who handles business sales on a daily basis. Asking the family lawyer or a general practitioner will “almost certainly cause the deal to fall over, and if it doesn't fall over, it will almost certainly drive you mad with stress”.

The Turner Butler managing director sums up the issue: “[The sale process] is very emotional … I always say to my vendors, just think of the money, concentrate on the prize, everything else will drive you mad.”

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