Preparing for sale: Is your ‘house’ in order?
Many entrepreneurs reach a crossroads in their life where they consider whether new ownership or external investment in their business is the right next step, both from a professional and personal point of view, says Paul Kithoray at Cortus Advisory Group.
Whilst retirement age is an obvious trigger point, with the impact of Covid-19 we have seen many business owners take stock of their life journey which has driven the desire to de-risk, crystallise value and frankly enjoy the benefits of their hard work.
Selling your business is never plain sailing and the process can often be stressful, especially when outside parties are picking holes in the business you have lovingly nurtured and developed over a number of years. Engaging trusted advisors early on who have proven credentials in getting similar deals completed to the satisfaction of business owners and with whom you have a good personal chemistry is a critical part of this journey. Your advisors will guide you through the sale process and fundamentals in terms of setting out the business’ story but there are some less obvious things you can do well in advance of appointment and the kicking-off of a sale process that will help in the long run. Here are our top tips for practical actions you can take in preparing your business for sale:
People: Have you got the right team on board to take the business to the next level under new ownership? Now’s the time to have succession plans in place to plug organisational gaps in the business so that it’s more attractive to an outside investor.
Systems: Do your financial and operating systems allow you to effectively understand the ‘why’ as well as the ‘what’ in your business’ performance? Putting in place great MI that allows you to prove-out your instincts of the business’ performance and direction with hard facts is invaluable once you enter the due diligence process.
Housekeeping: Pre-sale would be a great time to do the kind of ‘housekeeping’ things you have been planning for the business that don’t cost the earth, simple things making sure your business tax status is fully up to date, that any environmental issues are dealt with and that you have robust cyber security processes, policies and procedures in place. All these things can inadvertently derail a deal if not addressed pre-sale.
Data preparation: This may seem obvious but so many businesses enter a sale process without adequately prepping their financial data so that it’s cohesive and easy for a buyer and their team to ‘diligence’. Messy data adds to the time taken to execute the deal and the old adage of ‘time kills deals’ should always be borne in mind.
The transaction process will always have bumps along the way and the emotional aspect should never be underestimated. However, you invest some time to ‘roll the pitch’ before the process gets started, you will have a much better chance of a successful outcome.
At Cortus Advisory Group, we have helped many businesses prepare for sale and guided them through financial due diligence and the wider deal process. If you would like to find out more details on how we can assist you, please contact Paul Kithoray at Cortus Advisory Group.