Buying or Selling your Business

Buying or Selling your Business

If you are thinking about buying or selling your business, then take some time to read through our tips, hints and tricks. These have been picked up while talking to dealers over the past 20 years, who were in the same position as you are right now.

For Buyers:

1. Start with the little one.
If you are thinking of making an acquisition, or a series of them, then pick a little company (whatever ‘little’ means in the context of your existing business). Make your mistakes on a small scale, learn from them and don’t repeat them as you acquire bigger companies.

2. Don’t buy the company.
Try not to only focus on the business or shares, instead buy the ‘goodwill’ of the company. You can do all the due diligence in the world but you never know what may be lurking under the surface.

3. Buy on an earn out.
And, be wary of how much you are paying up front.

4. Budget to lose half the business.
Then do everything you possibly can to avoid doing so.

5. Keep the key people.

For Sellers:

1. Plan ahead.
It pays to think as far in advance as possible. This means thinking about what you can be doing now to make it easier and more lucrative in 10 years time, and not rushing it when the time comes! In brief, work out your own ideal time frame (for you personally, and the business), come up with a plan then write it down and stick to the milestones.

2. Decide what YOU want.
Work out what you want, how involved you will be and what the business needs to deliver then write down what you need to do to get there. Think about your income here too - a lump sum is usually not much use unless you’ve already got a good pension and want to pay off your mortgage.

3. Get the business into shape to sell.
Often these are the same things you would do to improve the business anyway. In today’s working environment, data is key, this is what a company is buying from you. Clean, up to date and GDPR compliant customer data is attractive and will help facilitate a smooth handover.

4. Don’t base a decision solely on tax.
Entrepreneur’s tax relief, business property relief, no CGT on a business that’s been gifted (until they sell)… Don’t do it just to take advantage of tax relief, instead decide what you want to do then find the most tax efficient way of doing it.

5. Timescales
Once you have a potential buyer, sketch out a possible timeframe as a discussion point so you can visualise what will happen, but keep it fluid - you’ll need to adapt to unforeseen changes.

6. Make yourself expendable.
Pretend you’re not there - what happens? Reduce reliance on one person (yourself) by getting the right people in place… What kind of skills and qualities would you need from that person/people? Remember ‘attitude’ more than ‘qualifications’ and ‘will’ more than ‘skill’!

In brief, the things you need to do to get your business into the right shape to sell, are pretty much the same as what you’d do to increase your income and improve the quality of your life!

Building the value of your business - whether for sale or to keep - is something we can help with. We also spend a lot of time talking to dealers about their plans and we often match up those looking to sell with those looking to buy. If you’d like to discuss this topic in more detail, please call Sergio in the Business Development team on 0113 391 1100.