The decision to sell your business could well be the most important decision a business owner will make. While there is plenty of information available on starting a business venture, there is little advice and guidance on when and how to exit a business.
So, when selling a business, how does one maximise the return on both financial and emotional investment over the years?
“There are very important decisions a business owner must make and it is vital that a qualified and experienced professional be appointed to advise on the transaction” says George New of Horizon Capital Corporate Finance.
Selling a business can be a very complex and time-consuming proposition with many issues to address, and many pitfalls to avoid! George touches on some of these issues below:
Timing Of The Sale
Timing the sale of a business in terms of your personal objectives is critical. Considerations may be retirement, partial retirement, asset diversification, a new venture or merely a lifestyle change. From the business perspective, one must also consider the stage of the business in its life cycle, industry activity as well as its capital requirements for future growth.
Determination of the market value of a business can be achieved by price/earnings multiples, net asset value and/or by means of a discounted cash flow. Choosing the correct valuation method will depend on the specific business in question and will be crucial to achieving maximum value in the sale.
A business can be sold under many different types of sales agreements. It is imperative to structure the specific deal correctly as this will have different tax, risk, legal and accounting implications. It is important that the business seller fully understands the options available and chooses the most applicable structure.
It is important for the buyer of the business to be a good strategic and cultural fit in order to maximise synergies. Besides the obvious fact that the continued success of the business requires the new buyers to understand and comply with the culture and strategy of the business, there also may be a case where the seller is required to stay on for a period of time. Therefore, the buyer and seller will need to get along in terms of goals, objectives, ethics and values.
Full, Turnkey Solution
Horizon Capital Corporate Finance provides a complete service for the seller from the initial preparation of the business for sale to the facilitation of the purchase payment.
- George will begin by attaining an understanding of your business as well as your personal objectives
- He will then assist in preparing the business for sale – wholly or partially
- George will put together an extensive valuation of the business and prepare an information memorandum
- Buyers would be approached in a discreet and selective manner
- The optimal deal structure would be selected and a fair price negotiated
- Thereafter, George will oversee the preparation of the sale agreement and supporting documentation as well as facilitate the payment