At Heligan Partners, we believe the best way to look at selling your business is to consider, overall, what’s the right thing to do for the business. What state is it in, what is its growth trajectory, what’s needed to take it forward? The value you can achieve depends on a range of factors that indicate the past, present and future success of the business. Buyers, of course, will be trying to understand the potential future success.
Is your business ready to sell?
It may not be the right time if your profits are falling or other issues are impacting on the company’s success. Consider the buyer’s perspective. They are looking for a track record of growth.
Alternatively, there may be opportunities to leverage the potential for growth in your business. However, you will need to be able to clearly and objectively demonstrate this – both in terms of hard facts and narrative.
The rate of growth and the market you operate in will give you an idea of the value of your company. This will also help you to plan and prepare your business. Getting a valuation from an external partner can help you focus and adjust your business plan.
There are internal factors to consider too. Can the business function effectively without you? Have you built a management team and operating model that’s robust enough to continue when you leave?
Has there been rapid growth?
Growth brings increased risk. If your business is showing three or more years of steady growth, it might be time to assess your options and capitalise on the equity you have. It might also be the right time to consider what the next move should be for the business. A sale isn’t the only option when it comes to de-risking your position but, as outlined above, growth is certainly attractive to a buyer.
What opportunities could a new owner bring?
It might be that you think that your skills or experience are no longer able to help the business reach its potential. There’s no shame in this, it’s a mark of how far you have taken it. If this is the case, the right thing for the business is to find an owner who can take it forward. It could be that someone else could offer international sales channels, complementary technologies or a broader client base.
Have there been transactions involving similar companies?
The existence of transactions involving your competitors shouldn’t limit your aspirations. However, looking at businesses that are comparable to yours can be a useful guide and highlight where you need to focus. It also offers an idea of the likely availability of finance for a potential buyer, which will help to gauge the likely competitive landscape.
Are you personally ready to sell?
There are two key factors to take into consideration when it comes to your readiness to sell. Think about your mindset. If you’ve grown your business from when it was just you and a dream, will it be hard to let go? Take some time to reflect, honestly, about what you can now bring to your business, and what it can do for you in return. If you are ready to sell, be clear about whether you’re looking to go forward into another venture or you want to make more fundamental changes to your lifestyle.
Being clear about your objectives is key to this process. It’s never too early to start considering your options, and bringing your potential exit strategy into your business planning is a great way to take a long and balanced view. So you’ll be ready if the time comes.