Hot to get the best price for your business
Hot to get the best price for your business
By Alex Dodgshon

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How to get the best price when selling your business

TAGS:  Business Exit Strategies, Exit Planning, Exit Strategy, Maximising a Business Sale Price, Sellability, Selling a Business, Working with a Business Broker

Maximising the sale price when exiting your business is a common, and important, goal for company owners. The difference between a high and a low price could be the difference between you living the lifestyle you desire and simply getting by.

As business exit strategy consultants, how to sell your business for the highest price is one of the most common questions owners ask us. In this blog we look at the importance of planning, preparation and research in achieving maximum profit from your business sale.

Maximising profit makes business sense

On paper, planning to achieve a substantial sale price for your business might seem a little selfish, especially when there are employees, suppliers and customers impacted by the sale. In fact, it’s not greedy at all. You are entitled to seek a reasonable sum for selling a business you’ve worked hard to grow. Achieving a profitable sale price makes complete business sense.

The key is finding a buyer who will come close to your asking price, and the solution is all in the planning and preparation.

Planning your exit strategy

A well-planned exit strategy not only benefits the business owner, it also shows interested buyers that selling your business is not a decision you’ve taken lightly. Putting in the time and effort up front to plan your exit demonstrates how serious you are about moving on. Preparing for exit can increase business value by an average of 71%.

Your exit strategy documents the carefully considered steps you’ve taken to reach the point of putting your business on the open market – making your business a more interesting, valuable and attractive prospect to buyers.

Prepare your business for sale

Most businesses will need to do some groundwork before they even think about going to the open market. From documenting processes and procedures, implementing new systems and software, to preparing HR records, financial statements and customer reporting. Preparation takes time, but buyers will appreciate your effort and transparency, adding potential value to the sale price.

Focus on increasing value in your business

It’s time to tap in to the hidden potential of your business! There are opportunities to increase market value in every company. Most will take significant time and resource to achieve and should be built into your business exit strategy. The traditional ways that spring to mind include scaling up, growing sales revenue or increasing your market share. For sure, all these are likely to help you achieve a higher sale price, but they aren’t the only ways to increase business value.

Some of the alternative areas businesses can increase value include:

  • Identifying efficiencies in operational and administrative areas.
  • Diversification of risk, e.g. reducing reliance on a single customer, supplier or team member.
  • Implementing procedures, improving financial modelling and reporting, and preparing records to help streamline the sale process.
  • Reviewing marketing strategy and developing fully costed plans.
  • Developing a costed strategy for future growth and development that a buyer could pick up and run with, should they wish.
  • Putting all those plans you’ve been carrying around in your head down on paper.

Any of these actions will put your business in the best possible position to achieve a profitable sale. It’s a bit like applying for planning permission before you sell a house – a sure-fire way to add value.

Appoint an exit strategy consultant

One way to increase the value of your business is to enlist the support of an exit strategist. We can help you to identify potential areas in which to build value, and develop plans to achieve this in line with your exit strategy. Why not book a discovery call to discuss how we can help.

Do your research

When setting the sale price of your business, we recommend researching what other similar businesses have sold for. This process will help you to understand market conditions and compare and contrast other businesses to you own. If you’re not sure where to start, one of our Uscita exit consultants can help you with this. We deal with business sales just like yours, every day. Get in touch here.

Be open to negotiation

Be prepared for interested buyers to negotiate with you on price. Discovering a difference between perceived and actual business value is not unusual. When setting your asking price, allow room for movement. Set a lower limit that you don’t want to go below, the frameworks or types of payment structure you find acceptable and how long you are willing to spend handing over the business to new owners. Having these things in your mind will give you confidence to negotiate and maximise your price on the best terms available to you. Your business exit consultant can also be on hand to support you through negotiations.

Don’t be afraid to walk away

If a buyer offers below asking price, don’t be afraid to politely decline their offer and walk away from the negotiations. Yes, there is a risk you might lose a potential buyer, but doing so could increase the appeal of your business, triggering the buyer to offer a more realistic valuation. It’s the psychology of wanting something you can’t have! Sometimes the best results are achieved through confidently standing your ground.

Seek an independent business valuation

Before you set about planning to maximise the sale price of your business, contact us for your current market valuation.

Further reading

How much should I sell my business for?

The 8 key drivers of company value

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