Looking to sell your business? Here are some things to think about

At some point, every business owner needs to move on from their business, whether to retire, to deal with a change in personal circumstances, to embark on a new project or for any number of other reasons.

Equally, businesses can reach a stage in their growth where scaling up becomes increasingly difficult, as meeting the cost of the investment in layers of management, support functions and new premises needed to grow becomes unfeasible.

At that point, the sale of some or all of the equity in a business can bring in the investment and expertise needed to achieve rapid growth.

What should I do if I want to sell my business?

The first step to take is to be clear about why you want to sell your business and what you want to be the outcome of the sale.

You might want to think about points, including:

• Do you want to continue working in the business?
• Do you want a cash lump sum now or would you be prepared to be paid over several years?
• Do you want to retain any shares in the business?
• Is there anyone in particular you want to sell the business to – existing employees, a company or a family member?
• Do you want to see the business grow in a particular direction?
• Do you want to see it continue trading in its current form?

For each of these points, you should also think about whether your answer is a dealbreaker or not.

Once you are clear on what you want from the deal, it is time to identify potential buyers who might be in a position to offer you the deal you want.

You can approach corporate finance specialists to market your business to potential buyers or make informal approaches to existing contacts.

If you subsequently receive bids, you will then have the choice of accepting one in principle or negotiating, if they are too far from what you want.

What about the contracts and legal matters?

At this stage, you will want to work with the buyer to get an agreement down on paper – indeed, this will likely be part of the negotiating stage and you should have instructed solicitors by this point.

You should usually also agree to make the negotiations exclusive at this point.

Moreover, you should enable the buyer to carry out due diligence, by providing all the documentation they need. You can require the buyer to sign a non-disclosure agreement.

Once the terms of the deal are agreed upon and the buyer has carried out their due diligence, you can move ahead with the competition of the sale.