Selling your business: What holds owners back and how to move forward

The decision to sell a business for the first time marks a significant new chapter for business owners. The time, cost and valuation expectations are often barriers to a successful deal, but preparation and planning will get you over the line.

We have worked with hundreds of owner-managed businesses guiding them through the sale process. Here is how together we can make an exit as smooth and efficient as possible.

Barrier 1: Time

One significant obstacle to selling a business is the time commitment required and the length of the overall process. Finding a suitable buyer, negotiating terms and completing the transaction will take upwards of six months or more. Any sale comes with a significant time commitment on the owners and directors, which can be difficult to manage alongside running the business. Business owners often tell us that they struggle and do not have the bandwidth to manage an ongoing transaction.

Barrier 2: Cost

Furthermore, business owners often fail to realise that exiting a business can involve significant cost before the transaction is completed. These include professional fees for accountants,  financial advisors and lawyers. Those additional expenses can place a burden on the business in the short term and can often make the process financially challenging and all too easily discourage owners from proceeding to sell.

Barrier 3:  Business value

With any sale process, getting the most value from the sale is always considered a key motivator. Business owners often face uncertainty about how much their business is worth, making it difficult to set a realistic asking price with potential buyers and leading to distorted expectations.

Repeatable earnings including considerations around revenue concentration, contracted versus projected income, working capital requirements and normalisations, and the quality of earnings adjustments, can all have a material impact on expected earnings from sale. It’s important to work through these financial considerations and get advice before proceeding to sell.

Our approach

We provide support and assistance throughout the process from help finding a buyer, preparing financial records, meeting with advisors and potential buyers, conducting negotiations, and responding to due diligence requests. Costs associated with our work can be agreed at the outsight and help manage the financial cost concerns of a sale.

There are two ways we help address the barriers that can stop a successful sale.

Preparation

Being ‘deal ready’ is the key to a successful sale. That starts with business owners being prepared mentally and emotionally for everything that comes with the process. This will include succession planning considerations, building bridges for key customer and supplier relationships and preparing the business to continue without you as the business owner.

The time commitment and financial cost burdens that sale process creates can be limited with strong preparation. Assigning appropriate advisors and budgeting for deal costs, with open discussions around information requirements for both legal and financial diligence processes, ahead of the deal process can help understand what kind of information and volume of information will be required.

Valuation

By obtaining an independent professional valuation, business owners can gain a clear and objective estimate of the business’s value. This will help build credibility with potential buyers, can make negotiations smoother and reduce the likelihood of disputes over pricing. In addition, the valuation process can highlight strengths and weaknesses within the business, allowing the business owner to address issues and improve the company’s value before putting it on the market.

With Kreston Reeves as your partner, barriers to a successful and smooth sale can be managed with preparation and planning. Plus, valuations will help manage expectations around the real worth of your business in the market, leaving you ready for your next challenge. Find out more about our business, asset & share valuations here.

If you would like assistance navigating the sale of your business, please do get in touch with one of our experts.