Selling a Company - Planning is Critical

Ideally, a business exit will be the culmination of a well thought-out succession plan. It's actually remarkable just how many owner-managers reach this vital end-point without a detailed plan of how to realise the value of what they've built.

Some very critical considerations are often overlooked. One of the most common is the failure to plan for succession - the owner is often the central figure, its driving force, and the principal contact for staff, customers and suppliers.

As far in advance as possible, the owner needs to start delegating to potential successors in key managerial posts. The team that then develops might turn out be strong enough to stand as buy-out candidates as an alternative to a trade sale.

Timing and the nature of the exit are vital. Is the preference to sell over time and gradually ease out, or to sell out completely and move on? Are there family members who'd like to assume control and take the business forward, or is the best option to seek a clean sale to a competitor?

Right now, of course, there are unprecedented economic circumstances to take into account too. To still get the best price for a business in today's market, complex deal structuring techniques are necessary to bridge buyer uncertainty (and possibly funding constraints), with seller expectations. Competitive tension in a sale process can help enormously with price negotiations.

Identifying serious potential purchasers is imperative - some purchasing candidates may actually be competitors on "fishing expeditions", keen to study information about suppliers, customers and profits.

The process of selling a business is rarely quick and can be very distracting for management. It's vital not to lose focus on the performance of the business. To prevent it tailing-off during the sale itself, it's a good idea to assign roles in the sell-off to only one or two key people - and to delegate covering functions to others who can ensure the normal day-to-day running of the business.

Additional resource and in particular strong project management are essential. I guess you would expect me to say this, but strong, experienced advisers will pay for themselves many times over.

For a free, no obligation discussion, please contact us at website@najudd.co.uk or telephone 01908 698760.