How to sell your business FAST!Trying to sell a business fast is not usually the recommended strategy for getting the best price, but sometimes you don’t have a lot of choice. A quick sale for most businesses is a rare event, and it usually means you will give up some hard-earned value to do the deal quickly, and at the very least weaken your bargaining position with buyers.However, sometimes a fast sale is required because of circumstances, including:
What ever the reason for wanting a quick sale, there are some steps that can help the process along.
- Health related issues for the owner.
- Family issues that need the focus of the business owner.
- Financial distress.
- Disagreements with other shareholders.
We have listed five of the key steps we have used to help our clients reach a fast outcome.
Step 1 – Know the value of your business from the start
Step 2 - Have your documentation ready
- A clear understanding of the value range of your business (you don't need to show this - but you need to understand it so you don't lose money in the deal and you are in a position to make a quick assessment).
Make sure as a minimum you have:
Step 3 - Have your commercial team ready
- Your last three years of financial statements, preferably from your accountant.
- Latest sales and cost performance figures from your accounting package.
- Any deeds, certificates of title to assets, brand name registrations and any other contracts that will support the price you want.
- A confidentiality statement ready to sign.
Step 4 - The buyer will know you or your business
- Anyone can sell a business, but there are also many ways a deal can go wrong. At worst you can lose money and often it means finalising the deal takes longer than having a team ready in the first place.
- Depending on the size of the business you should at least get legal advice on what compliance requirements must be met and if the sale contract suits your circumstances. You should also be get taxation advice in relation Capital Gains Tax and other implications that are particular to your circumstances.
- A good commercial team can include your accountant, an experienced commercial lawyer, a broker and strategic advisor.
Step 5 – Be aware of your commercial strategy options before you approach a potential buyer
- If you're going to get a quick sale it will most likely come from someone who knows you or knows of your business. They will often be in the same industry as your business, or in some related industry.
- Make a list of the potential people that could buy your business including employees or staff, competitors, customers, suppliers or even relatives and friends.
- Ask yourself, which business also services my customers and could my business help them increase profits?
- Rank the list according to their likely interest, capacity to pay and future opportunities.
- Identify what each potential buyer is likely to want from your business, and therefore what they would be prepared to pay. Use this information to develop an appropriate commercial strategy.
- Know your limits - the lowest price at which you are prepared to sell.
- Even if you are desperate to sell, don’t reveal this to your buyers. Show that you are keen to reach an agreement, but highlight the agreement must benefit everyone involved.
- Consider the aspects of your business and the offer that may kill the deal or cause a buyer to shy away, and develop some effective responses.
In general, we have found that growing, well managed and profitable businesses attract a lot of interest, as well as the best price. But it is often the detail of the deal that takes time to sort out. A great business may sell overnight, but in most cases can take 6 months or longer.
It is not always the price that delays or kills a deal - it is the smaller details that make the buyer feel uneasy or fearful of the future. Having a plan in place to deal with these issues and being prepared for a commercial process is the best way to speed up the deal.
How ready are you to sell?
Do you need to sell your business fast? Are you prepared for what a buyer will ask? Do you know who your buyers might be and what they will want?
We can help you answer these questions - often over the phone. Contact us now for a no obligation, confidential and free discussion on your specific circumstances.
Either send us an email, call or fill out our enquiry form and we will get back to you promptly.