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Have you kissed enough frogs?

Have you kissed enough frogs?


Selling Your Business – The Two Step Process


Have You Kissed Enough Frogs?

Selling your business for maximum value can be a long process and is fraught with potential pitfalls. Trying to find a buyer for your business is not unlike trying to find a prince among a sea of frogs!

The days of selling your business fast and walking away on the same day are long gone for all but the very smallest and simplest businesses. For the rest of us there will be an agreed handover period of 6 months or more, working with the new owners, and having to get on!

Finding a buyer that you can work with in a positive way is as important as getting the right price for your business and you’re going to have to kiss a lot of frogs before you find your prince!

Always engage the services of a professional broker. A proprietor who is his own business broker has a fool for a client1. It is an unfortunate fact that most people that enquire about most businesses do not ever progress through more than one or two rounds of the process.

Whittling down the plethora of time wasters to a handful of genuine buyers requires a detachment and objectivity that is virtually impossible for the business owner to maintain, while still trying to run the business and generate as many opportunities to meet potential buyers as possible.

All business brokers that work in a proactive way will charge fees, and these will vary slightly, but this price variation is immaterial to the importance of choosing the broker that you can trust, understands what’s important to you, can work well with, and has your best interests at heart while securing you the best deal valuation from your business exit strategy.

At Vexus Corporate we are used to kissing frogs; it’s one of the most important things we do.

Importance of an independent business valuation

Importance of an independent business valuation


If you’ve worked your business up from the ground, the chances are that you’ll know everything about it – in terms of profits and losses, numbers of staff, business practices and codes of conduct. However, if you were asked for the total value of your business, would you have an answer ready?

Consider the possibility that you may wish to sell your business in future. Perhaps you’ve been asked to partner in an exciting new venture, or you’ve set your heart on moving abroad? You may simply want to spend more time with your family. Whatever the reason, an accurate independent business valuation can make the process of selling a business far less stressful, and much more likely to succeed. Conversely, a business valuation could even change your mind about selling – so it’s an essential task if you’re considering a change.

The business valuation process is complex, based not just on your bottom line profits, but a multitude of figures and factors – both quantitative and intangible. For this reason it is recommended that you consult several accountants or business brokers before any negotiations or discussions, to ensure you have a comprehensive and objective figure for the value of your business.

In terms of quantifiable and measurable data, an accountant or business broker will compile a broad overview of your financial situation, including a history of any profits or losses, overall revenue, and cash flow. On top of this, the value of your existing stock and any owned properties, like warehouses or shops, will be taken into consideration. Finally, the value of any company vehicles, equipment and fittings can be calculated and taken into account.

Other factors, which are less measurable but just as significant during the business valuation, also help to provide an accurate picture of your company’s value. Financial figures provide an objective and useful insight into material value, but they are irrelevant when we consider a company’s reputation and their image. Therefore, business brokers will often analyse the general public’s reception towards a business when completing a valuation. Relationships with both customers and suppliers will be considered, as will the success of any competitors. During the business valuation, accountants or brokers may also consider the likelihood of potential threats or opportunities on the horizon, like changes in regulations or new government initiatives.

With so many factors affecting the value of a company, sometimes different brokers or accountants will produce highly varied figures during their business valuation. For this reason it can be useful to visit several, to eliminate any anomalies and provide you with a more in-depth insight into the potential value of your company. Knowledge really is power when it comes to selling a business, and with an accurate sense of the value of your business, you ensure that you won’t waste your time with unrealistically high expectations, or spend years regretting the decision to sell too low.

Who might buy your business?

Who might buy your business?


Find a buyer for your business

If you have a business and are considering selling, you may be interested to know the different types of buyers who might buy your business. Identifying what drives different types of buyers is an integral part of the marketing process of your business. Buyers typically fall into one of the following categories:

Private Investors

These people invest in a private enterprise and do not have a fulltime involvement.

Trade Buyers

These people are typically competitors in the same industry. They believe that by acquiring a larger customer base they can reduce costs and improve operating efficiencies.

Existing Management

This is known as a ‘management buy out’ (MBO). This is where the management wish to take over the business, therefore raise funds from elsewhere to buy out the company they work for.

Private Equity Funds

These are firms / investment groups whose sole purpose is to purchase companies with strong growth prospects.

Job Buyers

These are people looking for a smaller company, which they intend to run as owner managers.

Family

This is where the business is sold or transferred to another family member.

Strategic

This is where a larger company wishes to make an acquisition for strategic reasons, e.g. obtain new product skills or services they do not currently have.

When selling your business always research the entire process and consider which of the above you feel might be the best route and have the most beneficial outcome when selling your business.