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The Importance of being Sale-Ready

 

If you had to sell your business tomorrow, would you secure maximum value? The key to achieving a good price lies in your pre-sale preparation – and it’s never too early to start.

KPMG’s Hamish McLachlan and Justin Ensor offer five tips for business owners who want to maximise value and close a successful deal.

  • Plan ahead

Regardless of whether you intend to sell your business tomorrow – or in five years time – it’s important to be constantly sale-ready. You might receive an unsolicited approach from a prospective buyer. Or an unexpected change in circumstances, including ill health, may suddenly force your hand.

  • Know your buyer

It’s important to identify your target market early, says Hamish. Your options may include a competitor/trade buyer, a joint venture or corporate partnership, selling to family members, or a management buy-out.

Once you’ve identified your likely buyer, then you can ask the question, what does this business need to look like in order to appeal to the target?

Trade buyers want to know your business will be a good ‘fit’ with theirs, for instance; while independent buyers will be more focused on the ability of the business to generate earnings without your involvement.

  • Optimise value

This applies regardless of whether you’re selling, or staying in the business.

If you’re thinking of selling in 2-3 years time, now is the time to start fine-tuning your business performance, increasing earnings, and addressing issues that could get in the way of a successful sale.

Which areas need strengthening? How robust are your internal processes? Have you secured your business IP?

  • Make yourself dispensable

If your business is of a suitable size, the key is to develop a good management team that can run the business without you. Not only will this make the business more attractive to prospective buyers – but it’s also a sound strategy if you don’t end up selling, and decide to retain your business as a long-term income stream.

  • Get help to close the deal

Once you decide to sell your business – you’ll want to do it once, and do it right. With expert advisers on board to facilitate the sale, you’ll avoid the common (and costly) mistakes of first-time sellers.

Having an adviser on board will help you navigate the process, and ensure you maximise your position.

Do you have any questions about being sale-ready? KPMG’s Enterprise team will be happy to answer them.

 

Your sale-ready checklist:

  • Are you maintaining an accurate and up-to-date set of accounts?
  • Can you demonstrate a history of tax compliance?
  • Do you have well-documented processes for various aspects of operating the business?
  • Do you have clear KPIs and a strong understanding of what drives your business performance?
  • Do you have a good track record with employment relations?
  • Do you have clarity around all legal issues (e.g contracts in order, no unresolved disputes, intellectual property etc)?

We can also work with you to ensure your business is in optimal shape for a sale, evaluate offers, manage due diligence procedures, and supervise the transaction.


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