Five key factors to maximise the sale potential of your business
Financials must be ready and available for a serious qualified buyer. If there is hesitation in presenting financials, a buyer may assume the worst. For the same reason, always have the operating results available for the periods since the last financial accounts. For businesses of a significant size, having a detailed budget ready is all the better. The due diligence period will require access to detailed records for a number of previous years. Check that these records are prepared now so that the settlement is not delayed by due diligence taking longer than expected.
2. Formalising Key Relationships
If your business includes exclusive supply agreements or significant long standing contracts, now is the time to formalise these relationships. A handshake may go a long way in these relationships for you, but a purchaser will respond positively to a business that has binding agreements that are transferable. This will also apply to important issues such as intellectual property (copyrights, patents) if such items are of particular importance to the value of your business.
Many medium to large businesses have formal operations and procedure manuals. However, most smaller businesses have been run primarily by the proprietor since inception. Consequently, many of the vital systems remain locked in the mind of the proprietor. In order to allow for a smooth transition in any sized business, procedures, techniques and other crucial systems must be recorded and accessible for the new owner. Most prospective buyers will want to be assured that the business can continue to be viable without you before they will even consider an offer.
If location is one of the prime features of your business sale, it is extremely important to have a long lease with favourable terms, such as rent reviews. Negotiating such a lease and including options to extend prior to listing your business will provide some security to a buyer on this key selling point.
First impressions count. Maintain the visual presentation of all parts of your business such as: the exterior, display areas, offices and other work areas. Many potential buyers will form first impressions of the efficiency and morale of the business by simply observing its presentation. This basic principle holds true for businesses of all sizes.