For a business owner, the sale of their business can be a daunting process. Unless you’ve been through the sale process before.
people rarely know what to expect and are very conscious about asking for advice. It is important to remember that selling your business is a two step process. It is commonly thought that as soon as a broker is engaged, that is the end of the process and the business will be sold to the first buyer that comes along; but that is most definitely not the case. In fact, engaging a broker is just the beginning of the process and is by no means the time for a Business Owner to sit back and relax. It’s important to understand the two steps to selling a business.
Step 1 – Confidentially taking the business to market
Step one is all about testing the water, seeing how buoyant the market is and seeing what type of buyers the business attracts. It is essential to keep this stage confidential as it can be detrimental for the business if customers, competitors and suppliers find out that a business is selling (unless the release of information has been carefully managed). Step 1 is the most important part of the process. Your broker needs to cast the net wide to a variety of potential buyers to build maximum interest in your business. This step involves a comprehensive and highly confidential marketing process to help identify a range of potential buyers. This is followed by heavily qualifying these buyers and supporting you during the negotiation of offers with the potential buyers. Only when all aspects of the offers are understood and agreed, would you agree to one offer and progress to step 2.
Step 2 – Pushing the Button
After receiving an acceptable offer from one potential buyer, this is where you would decide whether or not you feel it is the right time to sell. You would have every right at this stage to decide that you would like to: wait for a different offer, delay the process for a few months, or come back to selling in a few years. However, if you were ready to push the button and formally commit, you would proceed with Heads of Terms. Once the Heads of Terms have been negotiated and agreed, with the right management and focus you would be on the right path to a successful completion, subject to the due diligence and legal process.
The one piece of advice we give to all business owners who are considering their exit options, is give yourself more time than you think you need. Engaging a broker doesn’t mean you’re on the home stretch and the business will be sold over the upcoming months. It actually means you’re getting the ball rolling and putting your business in the best position to secure the right deal. We can’t predict the future, but we can plan for it.