Read time: 3 min read
There are many reasons why you may feel now is the right time to sell your business, especially if you’ve spent many years building it from scratch. Perhaps you’ve taken the company as far as you can, or maybe you’re ready to retire or to take on a new challenge.
Whatever your rationale, the good news is that there are plenty of acquirers looking to buy high-quality businesses. Here’s what you need to know about preparing for an exit in 2022.
It takes time
Malcolm Murray, Managing Director of Entrepreneurs Hub, which works with businesses to prepare and sell, says the process typically takes nine to 12 months (provided no significant pre-sale actions or growth is required). The first six months will mostly be spent preparing, finding potential buyers and securing offers. The remaining time is taken up by negotiations, due diligence and legal requirements.
The crucial thing is to be prepared, be proactive and do all you can to make things easier.
“It is possible, if you work with an adviser, to identify a wide pool of potential acquirers,” says Malcolm. “You then bring everybody through the process together in order to leverage competition, and you get a select group who are genuinely interested in acquiring the business. That’s when you get a range of offers, deal terms and acquirers to choose from.”
In the current climate, many well-run businesses are receiving unsolicited approaches. If that’s the case for you, Malcolm advises caution because the party expressing interest won’t necessarily be the right fit for your company.
“If someone knocks on your door, it’s tempting to think it’s an easy transaction without a big process,” he says. “But it can end up being drawn out with a high risk of failure if there’s only one interested party because the buyer has no incentive to drive the deal.”
Malcolm also adds: “In more than 25 years of deal making and hundreds of deals later, we have seen that, even if the seller doesn’t want to run a wide sale process, just reaching out to a few more potential acquirers leads to much greater transaction success – a higher valuation, better deal terms and, more often than not, an acquirer that is a better cultural fit.”
Be prepared
There are certain things businesses should be able to demonstrate if the owner wants to achieve a good price when it comes to a sale.
“It’s all about the risk versus opportunity profile of the business,” says Malcolm. “In any sale, it’s risk that will impact the value and deal terms downwards and, conversely, opportunity that will increase value and improve terms.”
Factors that are likely to be appealing to a buyer include having a good spread of loyal customers, barriers to entry, a strong financial profile, not being too reliant on the founders, a diversified supplier base, a path to growth and so on. Likewise, an acquirer won’t like surprises during the deal-making process, including lack of preparedness by the sellers. This leads to an inability to accurately impart a data-driven understanding of the business and can frustrate the sale process.
SMEs will also benefit from being able to show long-term client relationships; a business model with high barriers to entry; evidence of good growth and future potential; and a strong financial profile.
What about COVID-19?
Many businesses had to put plans on hold during the pandemic. While potential buyers will want to know how your company has fared over the past two years, they’re likely to be understanding when it comes to a drop-off in performance. Key questions are likely to include: how have you got through the pandemic? Where were you and where are you now? How are you recovering?
“If the company has had a dip in turnover and profit because of COVID-19, then buyers can be quite sympathetic, but they will want to see evidence of recovery,” says Malcolm.
Get ready for a rollercoaster
Very few exit processes run smoothly from beginning to end. Once you’ve found someone ready to buy the business, the scrutiny during the due-diligence process can be emotionally draining for those involved.
“The first thing an owner needs to do is commit to the process,” says Malcolm. “If they do that, then it will work well. That means commitment to providing the right information at the right time and checking all documentation to make sure it represents the business. A lot of owners don’t realise how much is involved in the due-diligence process.”
No matter how involved you become in the sale, it’s essential to keep an eye on the day-to-day running of the company because if that suffers and profits drop, the value of the sale could be affected. Malcolm advises entrepreneurs to carry on running things as if they’re not selling.
“It will be an emotional rollercoaster,” he adds. “There will be highs and lows. But you can sort out most issues. The last three weeks are usually the most emotional, which is why it’s so important to have an adviser there who has been through it all before.”
Talk to us
If you’re considering selling your business, contact us today and we can explore your options with you.
Read time: 3 min read
There are many reasons why you may feel now is the right time to sell your business, especially if you’ve spent many years building it from scratch. Perhaps you’ve taken the company as far as you can, or maybe you’re ready to retire or to take on a new challenge.
Whatever your rationale, the good news is that there are plenty of acquirers looking to buy high-quality businesses. Here’s what you need to know about preparing for an exit in 2022.
It takes time
Malcolm Murray, Managing Director of Entrepreneurs Hub, which works with businesses to prepare and sell, says the process typically takes nine to 12 months (provided no significant pre-sale actions or growth is required). The first six months will mostly be spent preparing, finding potential buyers and securing offers. The remaining time is taken up by negotiations, due diligence and legal requirements.
The crucial thing is to be prepared, be proactive and do all you can to make things easier.
“It is possible, if you work with an adviser, to identify a wide pool of potential acquirers,” says Malcolm. “You then bring everybody through the process together in order to leverage competition, and you get a select group who are genuinely interested in acquiring the business. That’s when you get a range of offers, deal terms and acquirers to choose from.”
In the current climate, many well-run businesses are receiving unsolicited approaches. If that’s the case for you, Malcolm advises caution because the party expressing interest won’t necessarily be the right fit for your company.
“If someone knocks on your door, it’s tempting to think it’s an easy transaction without a big process,” he says. “But it can end up being drawn out with a high risk of failure if there’s only one interested party because the buyer has no incentive to drive the deal.”
Malcolm also adds: “In more than 25 years of deal making and hundreds of deals later, we have seen that, even if the seller doesn’t want to run a wide sale process, just reaching out to a few more potential acquirers leads to much greater transaction success – a higher valuation, better deal terms and, more often than not, an acquirer that is a better cultural fit.”
Be prepared
There are certain things businesses should be able to demonstrate if the owner wants to achieve a good price when it comes to a sale.
“It’s all about the risk versus opportunity profile of the business,” says Malcolm. “In any sale, it’s risk that will impact the value and deal terms downwards and, conversely, opportunity that will increase value and improve terms.”
Factors that are likely to be appealing to a buyer include having a good spread of loyal customers, barriers to entry, a strong financial profile, not being too reliant on the founders, a diversified supplier base, a path to growth and so on. Likewise, an acquirer won’t like surprises during the deal-making process, including lack of preparedness by the sellers. This leads to an inability to accurately impart a data-driven understanding of the business and can frustrate the sale process.
SMEs will also benefit from being able to show long-term client relationships; a business model with high barriers to entry; evidence of good growth and future potential; and a strong financial profile.
What about COVID-19?
Many businesses had to put plans on hold during the pandemic. While potential buyers will want to know how your company has fared over the past two years, they’re likely to be understanding when it comes to a drop-off in performance. Key questions are likely to include: how have you got through the pandemic? Where were you and where are you now? How are you recovering?
“If the company has had a dip in turnover and profit because of COVID-19, then buyers can be quite sympathetic, but they will want to see evidence of recovery,” says Malcolm.
Get ready for a rollercoaster
Very few exit processes run smoothly from beginning to end. Once you’ve found someone ready to buy the business, the scrutiny during the due-diligence process can be emotionally draining for those involved.
“The first thing an owner needs to do is commit to the process,” says Malcolm. “If they do that, then it will work well. That means commitment to providing the right information at the right time and checking all documentation to make sure it represents the business. A lot of owners don’t realise how much is involved in the due-diligence process.”
No matter how involved you become in the sale, it’s essential to keep an eye on the day-to-day running of the company because if that suffers and profits drop, the value of the sale could be affected. Malcolm advises entrepreneurs to carry on running things as if they’re not selling.
“It will be an emotional rollercoaster,” he adds. “There will be highs and lows. But you can sort out most issues. The last three weeks are usually the most emotional, which is why it’s so important to have an adviser there who has been through it all before.”
Talk to us
If you’re considering selling your business, contact us today and we can explore your options with you.
Read time: 3 min read
There are many reasons why you may feel now is the right time to sell your business, especially if you’ve spent many years building it from scratch. Perhaps you’ve taken the company as far as you can, or maybe you’re ready to retire or to take on a new challenge.
Whatever your rationale, the good news is that there are plenty of acquirers looking to buy high-quality businesses. Here’s what you need to know about preparing for an exit in 2022.
It takes time
Malcolm Murray, Managing Director of Entrepreneurs Hub, which works with businesses to prepare and sell, says the process typically takes nine to 12 months (provided no significant pre-sale actions or growth is required). The first six months will mostly be spent preparing, finding potential buyers and securing offers. The remaining time is taken up by negotiations, due diligence and legal requirements.
The crucial thing is to be prepared, be proactive and do all you can to make things easier.
“It is possible, if you work with an adviser, to identify a wide pool of potential acquirers,” says Malcolm. “You then bring everybody through the process together in order to leverage competition, and you get a select group who are genuinely interested in acquiring the business. That’s when you get a range of offers, deal terms and acquirers to choose from.”
In the current climate, many well-run businesses are receiving unsolicited approaches. If that’s the case for you, Malcolm advises caution because the party expressing interest won’t necessarily be the right fit for your company.
“If someone knocks on your door, it’s tempting to think it’s an easy transaction without a big process,” he says. “But it can end up being drawn out with a high risk of failure if there’s only one interested party because the buyer has no incentive to drive the deal.”
Malcolm also adds: “In more than 25 years of deal making and hundreds of deals later, we have seen that, even if the seller doesn’t want to run a wide sale process, just reaching out to a few more potential acquirers leads to much greater transaction success – a higher valuation, better deal terms and, more often than not, an acquirer that is a better cultural fit.”
Be prepared
There are certain things businesses should be able to demonstrate if the owner wants to achieve a good price when it comes to a sale.
“It’s all about the risk versus opportunity profile of the business,” says Malcolm. “In any sale, it’s risk that will impact the value and deal terms downwards and, conversely, opportunity that will increase value and improve terms.”
Factors that are likely to be appealing to a buyer include having a good spread of loyal customers, barriers to entry, a strong financial profile, not being too reliant on the founders, a diversified supplier base, a path to growth and so on. Likewise, an acquirer won’t like surprises during the deal-making process, including lack of preparedness by the sellers. This leads to an inability to accurately impart a data-driven understanding of the business and can frustrate the sale process.
SMEs will also benefit from being able to show long-term client relationships; a business model with high barriers to entry; evidence of good growth and future potential; and a strong financial profile.
What about COVID-19?
Many businesses had to put plans on hold during the pandemic. While potential buyers will want to know how your company has fared over the past two years, they’re likely to be understanding when it comes to a drop-off in performance. Key questions are likely to include: how have you got through the pandemic? Where were you and where are you now? How are you recovering?
“If the company has had a dip in turnover and profit because of COVID-19, then buyers can be quite sympathetic, but they will want to see evidence of recovery,” says Malcolm.
Get ready for a rollercoaster
Very few exit processes run smoothly from beginning to end. Once you’ve found someone ready to buy the business, the scrutiny during the due-diligence process can be emotionally draining for those involved.
“The first thing an owner needs to do is commit to the process,” says Malcolm. “If they do that, then it will work well. That means commitment to providing the right information at the right time and checking all documentation to make sure it represents the business. A lot of owners don’t realise how much is involved in the due-diligence process.”
No matter how involved you become in the sale, it’s essential to keep an eye on the day-to-day running of the company because if that suffers and profits drop, the value of the sale could be affected. Malcolm advises entrepreneurs to carry on running things as if they’re not selling.
“It will be an emotional rollercoaster,” he adds. “There will be highs and lows. But you can sort out most issues. The last three weeks are usually the most emotional, which is why it’s so important to have an adviser there who has been through it all before.”
Talk to us
If you’re considering selling your business, contact us today and we can explore your options with you.