Selling Your Business?
Some SMEs are looking to sell, and there are plenty of buyers out there looking for good quality businesses.
They are looking to bulk up and get greater critical mass than organic growth can bring. The first part of the year will be a busy time for this. The buyers will be selective; they will pay the right price for well run, profitable businesses. See article below.
Poor performers are likely to be left on the shelf. If you are thinking about selling, make sure the numbers and the business model stack up. If you are looking to buy, make sure you buy value.
5. Competition will increase
Look for smart ways to differentiate and compete in your market. Don't get sucked into competing on price alone. For the majority it is a no-win solution.
Is there any good news?
The good news is that you can often make more money in a tough market than in a buoyant one. Tougher markets will shake out lesser quality competition, leaving more business for those that are still around. You need to know your numbers; manage them closely and be prepared to make tough decisions if necessary.
Succession: It's a lot like selling a house
Just like putting a house on the market, selling a business requires careful planning, preparation and presentation. The key is presenting a well-managed business, which even after a bit of digging, will measure up to a purchaser's expectation.
So how do you get your 'house' in order?
Get good advice. Talk to your accountant or lawyer early in the process. Even better, talk to them at the same time, but in any event make sure they are talking to each other. Always ask what experience they have in succession.
Don't fragment the process by getting too many professionals involved. Your accountant and lawyer can recommend any additional assistance.
Work out what you want out of the process. Do you want to keep it in the family? Or perhaps you want to be a few steps removed and would prefer to sell to a third party?
How does the current business structure stack up? Think about streamlining the structure and cutting out all those hastily formed and dormant companies.
When the sale goes through do you have a plan to minimise the tax consequences?
Deal with the regulatory requirements. Find your company records and sort them out.
Review supply agreements and determine the impact a sale would have on them and whether they can be handed on to the purchaser.
Is the plant and equipment owned or leased, and what state is it in?
Identify the goodwill and intellectual property tied to the business as this will ultimately affect the sale price.
Ensure all current employment relationships are up-to-date. There will ultimately be redundancy and other issues to deal with.
Posted on Thu, 1 March 2012
by Shawn O'Grady