Marketing your business for a sale

Waiting for a knock on the door to sell your business? You could be leaving value on the table.

Planning for succession in an owner managed business is a significant life event. One that it can be tempting to delay until an offer too good to refuse presents itself.

This approach might hit the jackpot in some instances but in others, it can cause a sense of ‘what if’. Here are a few reasons why marketing your business beats waiting for a knock on the door.

Is this the best offer?

In simple terms, a business is worth what someone will pay for it. Without testing the market, how can we be sure that this was truly the best offer out there?

A single offer feels safe but it could be below the potential.

No competitive tension

A marketed process can create competitive tension. The winning bidder is elated and wants to drive the deal forward.

It is not uncommon for a transaction to lose momentum during the process. This could be due to an issue identified in due diligence or just a general change in buyer appetite. In a competitive process, the buyer will be thinking ‘if we do not do this deal, then our competitor might’. It helps add a layer of justification for a buyer to move the deal on.

Dusty books = discounted deal?

Maintaining buyer confidence is key to a successful deal. Tidy accounting records which provide good analysis and reconcile are an important tool in maintaining confidence.

There is also additional deal value to be obtained here. Most deals will feature a normalised working capital target. Finessing your working capital a year in advance of going to market can unlock more cash and ultimately, increase the purchase price.

Being proactive puts you in control. Aside from a full marketing exercise, other options such as MBOs or EOTs are best approached when a plan is put into place.

Ensors’ Corporate Finance team can help with your succession planning. Contact simon.martin@ensors.co.uk for an initial conversation about the topics above.

The information contained within this publication is given by way of general guidance. Specialist advice should always be sought in relation to your particular circumstances. No liability is accepted by Ensors for any actions taken without seeking appropriate professional advice.