Business owners looking to sell often miss out – they don’t always make the most from deals, and sometimes need advice from the professionals.
Maybe you’ve built the company up from the ground and it’s time for a change of direction. Maybe you’ve come to realise this over time, or maybe this was the plan from the start. Maybe your priorities have changed; maybe you want to reinvest; maybe you want to enjoy the wealth you’ve created. Whatever your reasons for selling the company, we all want you to get the most out of it. You probably know what you have to do, but an owner at the end of their ownership might not be thinking the right things. Here are our top five tips for boosting company value before sale.
Mind your margins
It’s easy to take expenses for granted – or even to welcome them, with a weather eye on the tax return. When a sale is on the horizon, though, charging travel and lunch to the company credit card eats away at the profit margin – one of the first things a buyer will be looking at. On top of that, an expense account with too many petty little charges makes the owner look irresponsible, and that won’t bring the buyers in.
Have accounts audited
Besides having confidence in the owner, buyers need to have confidence in the books. Watertight, audited accounts mean the buyer knows exactly what they’re taking on. They know where the profit comes from, they know when the busy and the fallow periods will be, and – in an ideal world – they’ll know a third party professional has checked things over and given them the OK.
Focus on recurring revenue streams
The last months of ownership are no time to be chasing the once-in-a-lifetime, all-or-nothing opportunity. Buyers want a reliable return on investment, a proven stream of income, and long-term, stable relationships between the company and its clients, customers or suppliers. You may be feeling devil-may-care toward the end of your tenure as owner – play it safe.
Keep key staff in place
As with revenue, stability and sustainability are key. Nobody wants to take on a team with high turnover, major inexperience or poor morale, so the company needs to maintain its most important staff through the transition. When you announce your intention to sell, it might be wise to introduce incentives for those key personnel, such as extra holiday days for long-term employees, or bonus plans tied to profit (another reason to mind the margins and focus on reliable revenue).
Create a good first impression
Chances are, by the time you’re ready to sell, you’ve become used to your workplace, to the point where you don’t even see the wear and tear. A buyer won’t be used to it – they’ll be looking with fresh eyes. You need to make sure your workspace looks its best with a fresh lick of paint, new furniture, up-to-date literature in the waiting area – all the little things that nobody thinks about.
Selling a company is as much about the impression of value as the actual value itself. The company has to reassure the buyer – it has to look and feel worth buying – and the owners are in the best position to make this happen. A few informed choices, and a reminder to think about the little details, and everyone benefits.
If you need any advice or further information on any business related issues, feel free to give us a call on 0845 337 3327 to speak to one of our consultants.