How to maximise your business’s value before selling

The writer of this article is co-owner of Bridge Brokers

If you are thinking of selling your business the first question to ask yourself is: how can I attract the right buyer and get the purchase price I would desire?

Plan ahead

Selling your business should be in your mind all the time. Investing in new technologies, improving on the management system, finding new and inventive opportunities to grow from strength to power, and most important of all, documenting everything – a paper-trail is worth its weight in gold!

You should plan for two to three years before starting the sales process. This will certainly have a positive end result to achieve a well-earned asking price. 

The process of maximising the value of your business consists of four stages:

1. Define your assets, and be clear about what you are selling.

• Tangible assets: land, property, investments, inventory, vehicles such as trucks or boats, or any other valuables
• Intangible assets: the goodwill
• Fixed assets or capital assets: equipment, land, buildings… whatever is needed to continue with the    business. These assets are stated in your balance sheet (costs minus depreciation)

Paperwork is so crucial as it is the ONLY thing that proves your claims in relation to the business’s returns

In other words: know exactly what you are selling and how much it is worth.

2. Make sure that the financials are in order – balance sheet, assets, liabilities and taxation should be in place. 

Buyers want to know the facts, not only the opportunities the business has to offer.

Steer away from avoiding the tax man as this trend is decreasing in popularity. Paperwork is so crucial as it is the ONLY thing that proves your claims in relation to the business’s returns. Ultimately this is what is needed if you wish to sell: tangible proof.

3. Maximise the quality of your business through having good IP (intellectual property), a strong location (physical address), keeping the appearance and equipment in good condition. A good looking, clean operation goes a long way.

4. Why is the business on the market? This is one of the important questions a potential buyer will ask.

Be truthful; hiding any truth about the business will only cause problems later when the buyer finds out by themselves. Time and effort will be wasted.

To summarise: plan ahead, have all documentation ready, make sure all assets are in the best condition, present your business truthfully and enthusiastically. Put yourself in the ‘buyer’s shoes’!

Listen to Lessons from Kodak's demise, our latest BusinessesForSale.com vlog