A Guide On How To Sell Your Business Successfully
If you are considering selling your business, our comprehensive ten-point guide is here to assist you in securing the best possible deal. With a wealth of experience in corporate finance, our dedicated team at Gallagher Keane has successfully facilitated numerous business sales across various industry sectors. Our portfolio includes several high-profile transactions that have addressed the challenges faced by owner-managers during the process of selling their businesses.
There are four stages to selling a business:
- Preparing for sale
- Identifying the best purchaser
- Closing the deal.
Preparing for sale:
1. Strategic Forward Planning:
Start planning for the sale of your business well in advance, ideally two years ahead. Consider the perspective of potential buyers and focus on enhancing the aspects that would make your business attractive to them. For example, if local customers are more appealing to buyers, prioritise developing and expanding your Irish customer base.
2. Profitability Optimisation:
Work on maximising your business’s profitability by identifying and reducing unnecessary costs or implementing restructuring measures. Buyers are interested in a company’s potential for generating higher profits, so make the necessary tough decisions to improve financial performance and demonstrate its future earning capacity.
3. Employee Retention Strategies:
Ensure key employees vital to the smooth operation of your business are motivated to stay. Implement employee retention strategies which could involve offering incentives such as retention bonuses, or equity participation, to bind essential employees to the company. This provides reassurance to potential buyers that key talent will remain in place during and after the transition.
4. Resolving Controversial Issues:
Address any contentious or disturbing issues before initiating the sale process. Resolve legal actions or disputes and ensure clear ownership of assets. Potential buyers are wary of acquiring businesses with unresolved issues, as they may pose risks or legal complications. By proactively resolving these matters, you increase buyer confidence and minimise the need for negotiations based on worst-case scenarios.
Identifying the best purchaser:
5. Conduct Thorough Market Research:
While you may already have a potential buyer in mind, it is advisable to engage a corporate finance adviser to identify additional potential buyers. These experts can explore the market and identify parties who may place a higher value on your business, potentially resulting in a higher purchase price. By widening the pool of potential buyers, you increase your chances of finding the best fit for your business.
6. Maintain Strict Confidentiality:
Maintaining confidentiality throughout the sale process is crucial to minimise uncertainty and protect the value of your business. Informing customers, suppliers, or employees prematurely could disrupt operations and impact their perceived worth. Engage a corporate finance adviser to ensure the confidentiality of the sale, limiting disclosure to a “need-to-know” basis. Such advisors can help you navigate the process while safeguarding sensitive information.
7. Avoid Naming Your Price:
Instead of setting a specific price, establish an internal target price range that includes a top target and a walk-away price. When engaging with potential buyers, refrain from disclosing your desired price. Encourage them to present their best offer, allowing you to evaluate their valuation and negotiate from a stronger position. Set clear boundaries and be prepared to walk away if offers do not meet your minimum expectations. Having a team of advisers, including financial and legal experts, to guide, advise and provide support during negotiations is critical to obtaining the optimal price and deal structure.
8. Understand the Value to Potential Buyers:
Recognize that the value of your business can vary depending on the buyer’s strategic objectives and potential synergies. Understand the potential for enhanced profitability or other advantages that may arise from combining your business with the buyer’s operations. Gain insights into the buyer’s objectives and concerns to tailor your negotiation approach effectively. By understanding their motivations, you can emphasize how your business aligns with their goals and maximize the perceived value of your business in their eyes.
Closing the deal:
9. Maintain Focus on the Business:
Throughout the sale process, it is crucial to keep your attention on the day-to-day operations of your business. It’s common for vendors to become engrossed in the sale, neglecting their business and potentially giving buyers leverage to negotiate a lower price. By staying focused, you can maintain the business’s performance and demonstrate its value to potential buyers. By engaging a financial adviser to manage the process and negotiations will allow you to remain focussed on your business and ensuring its continued performance.
10. Seek Professional Advice:
Selling your business is usually a once-in-a-lifetime event, often representing a culmination of years of hard work and personal achievement. To ensure you receive the best possible deal, it is essential to seek high-quality professional advice from experienced financial specialists who understand owner-managed businesses.
By following these steps and seeking the right support, you can navigate the closing process and achieve a favourable result that reflects the value of your hard work and dedication.
Get in Touch:
At Gallagher Keane, we can guide you through the intricacies of the sale process and negotiations, provide valuable insights, and help you achieve the optimal outcome. If you are interested in finding out how we can help your business, please book a no-obligation call: