Selling a Business: Is now a good time to sell my business, or should I wait?
In our second blog on Selling a Business, corporate finance manager Ian Waddingham discusses how to get the timing right.
Selling at the right time means you should maximise the price you receive for your business – but timing is subject to a number of personal and commercial considerations.
If the business is facing manifest problems then you should think carefully about whehther that is the right time to sell. It often isn’t – but the caveat to this is if you believe that the problems are perhaps unsolvable and hence delaying a sale means that the situation is only likely to worsen. A hurried or forced sale will not give you the best value.
Owners should always have in mind what the likely exit route will be and carry out effective forward planning to enable them to influence the time that’s most advantageous for them.
The current economic climate means buyers are extremely cautious and business sales are generally taking much longer to complete – in some cases up to two years, rather than the pre-recession average of six months.
The performance of your industry can also determine whether now is a good time to sell. For example, trade buyers may be better able to fund a purchase when their own businesses are doing well and credit is available.
The financial management of your business is crucial to the timing of any successful sale. You should aim to sell when profits are rising, with demonstrable potential for further growth.
Preparing, or grooming your business, will ensure that all aspects of the business are in the right condition for a sale, for example, equipment is well-maintained, key contracts are in order, there are no unresolved legal disputes, and your tax position is satisfactory.
While you shouldn’t let the tax tail wag the commercial dog, the timing of a sale can be influenced by the tax consequences, and any forthcoming changes to tax legislation.