When should I sell my business?
Selling at the right time means you should maximise the value you receive for your business – but timing is subject to several key personal and commercial considerations.
If the business is evidently facing problems, then you should think carefully about whether it is the right time to sell. It often isn’t – but conversely, if you believe that the problems may be unsolvable, delaying a sale means that the situation is only likely to become worse.
A hurried or forced sale is unlikely to give you the best value.
Business owners should always have in mind what their likely exit route will be and carry out effective forward planning to enable them to influence the time that’s most advantageous for them to sell.
The wider economic climate is likely to have an influence on the number of potential buyers and on the timescale for a business to sell. When business confidence is high, sale processes are generally shorter in length, whilst in a downturn many buyers are extremely cautious and business sales can take much longer to complete.
The performance of your industry can also determine whether now is a good time to sell. For example, trade buyers are likely to be better able to fund a purchase when their own businesses are doing well and credit from banks and other funders will be more readily available to them.
The financial management of your business is crucial to the timing of any successful sale. You should aim to sell when profits are rising and to be able to demonstrate potential for future growth.
Preparing, or grooming your business, will ensure that all aspects of the business are in the right condition for a sale. For example, you should ensure all equipment is well-maintained, key contracts are in order, there are no unresolved legal disputes and your tax affairs are up to date.
Whilst you should never let the tax tail wag the commercial dog, the timing of a sale can be influenced by the tax consequences (on the ultimate value you receive) and any forthcoming changes to tax legislation.
The Corporate Finance team at MHA Moore and Smalley have significant experience in advising on grooming businesses for sale and in managing the ultimate business sale process.
If you would like to discuss this blog in more detail, please contact Paul Bennett from our Corporate Finance team on 01772 821021.