This website uses cookies to provide necessary site functionality, monitor performance, give you access to products and services that are most relevant to you, and improve the online user experience. For further information about how we use cookies, please visit our Privacy Statement. For information on how to adjust your cookie preferences including how to delete cookies, please consult your browser’s “Help” function.
Business owners decide to sell for many reasons. You may want to retire, gain financial liquidity for new opportunities, or pursue new synergies with a complimentary business. You may find your business growth exceeds manageability, or perhaps you want to take care of your family by de-risking your assets.
For a successful sale, your business needs to stand out in a crowded, competitive marketplace.
By taking active measures ahead of time, you’ll not only be better prepared to weather the sales process, but you’ll increase your odds of finding the perfect buyer, maximizing price and ensuring a seamless transition. If you don’t prepare for a sale, you may not get the right price for your business, leaving money on the table. Your business operations may be disrupted during the sales process due to lack of preparation or confidentiality. Importantly, you risk the possibility of a failed deal if you enter the sales process unprepared.
Following these steps can help you increase the likelihood of a sale:
Planning the sale of your business should begin well in advance. You need to develop a strategy that includes:
Developing this strategy will help you understand the strengths and weaknesses of your business, groom your business for sale and make sure you can maintain “business as usual” during a potentially long sales process.
Timing and market conditions will affect the price you get for your business. In addition, finding a strategic buyer—a buyer who can leverage the strengths of your business with another operation—can potentially give you a greater return than a buyer who plans to keep the business running at status quo. Your business advisor can help you with a diligent sales process that should help improve the price a potential purchaser will pay.
You’ll need to prepare an information memorandum, which is an overview of your business that will be used to attract potential buyers. High-level details such as a company profile and market analysis are provided to determine level of interest and set an initial price. Detailed particulars are provided only after a potential buyer has been pre-qualified as a serious would-be purchaser and they sign a confidentiality agreement.
Identifying potential purchasers that have a good strategic fit with your business and vision is achieved through a combination of confidential research and developing a list of purchasers who are active in the market. Once appropriate targets are identified, we will approach them confidentially, keeping the names of the company out of initial discussion to avoid harm to your ongoing business.
Careful negotiation is essential, as the terms you and the buyer agree to will affect the price you will receive for your business. To negotiate the terms that give you the best deal, you should carefully consider the following:
Your advisor should be there to assist you during the negotiating phase. This will help you stay focused on the important issues and simplify the coordination of other professionals, such as legal, tax, environmental, and accounting representatives. It will also keep negotiations on a professional level, so you can achieve terms that best meet your desired outcome.
Once you locate a buyer and come to an agreement on major terms and price, it’s best to close the deal as soon as you can. Remember, your business is not really sold until the paperwork is signed.
The sales process is a long one, so it pays to start planning well in advance. It also pays to have the right advisor beside you every step of the way. You’ve invested countless hours and immeasurable energy into building your business, so it’s important to put the same level of investment into ensuring a successful sale.
At Grant Thornton, our business advisors can help you through the sales process, from initial planning to successful close. Our professionals offer meaningful, actionable and holistic advice to allow you to meet your business goals and needs. Our commitment is to work closely with you throughout the sales process to make sure it’s managed efficiently, professionally and successfully.
[1] Mergermarket and CITI, “Upward bound,” 2019.
[2] Moody’s, “Global economic growth will remain sluggish as pessimistic business sentiment and trade uncertainty cloud 2020 outlook,” November 14, 2019.
