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Selling Your Business: The Basics

sell your business

Selling your business is a hard decision to make, and the process can be even harder to get your head around. The purpose of this blog is to try and provide clarity on the different ways in which you can go about selling your business.

There are 3 ways you can sell your business – including:

  • Private
  • Going Concern
  • Agent

 

Private

Selling your business privately gives you a lot more control over how it is done – as you are not dealing with a 3rd party who will do the advertising and negotiations for you. This will all be up to you, including the cost of advertising and even organising viewings.

Through this method, the money you receive once the deal is closed will be yours and no one else’s as you have conducted the entire sale with no outside help.

 

Going Concern

This method is a ‘guarantee’ you will give to the buyer stating that your business will be able to generate a profit for at least 12 months. You will usually be asked to show proof such as web presence, stocks, and/or previous profits so that the buyer in question can get an idea of how well the business is doing; they will make a decision based on how risky your business is.

 

Agent

An agent will be able to take on any tasks that may be inconvenient to you – including advertising, surveying the price of your business, and finding potential buyers who are looking for a business such as yours.

Agents will charge you a fee for the service they provide, however, this may be viewed as a good investment if they can find you a better deal and help make the process of selling easier.

 

Before You Sell

If you are thinking of selling your business, consider cleaning up your balance sheet, dropping poorly performing products or services, terminate your insider deals, make sure you’re all paid up on taxes and have at least two years’ worth of audited financial statements.

 

The process in six simple steps

Selling a business can take up to a year, here are six simple steps to give you a brief understanding of the process itself.

  1. Structuring the sale.

There are two ways to sell a business. One is to sell shares of the company that owns the business, and the other is to sell the assets that make up the business.

  1. Establishing a confidentiality agreement and heads of terms.

Before the seller and the buyer can start negotiating, agreements should be signed first. These include the confidentiality agreements, exclusivity agreements and the heads of terms.

  1. The process of due diligence

Once the preliminary agreements are settled, due diligence can begin. This is a legal investigation of the company in preparation for a sale.

  1. Securing key issues for the transaction

There will be issues as part of the transaction to consider. Things such as the property, environmental issues, IT and IP etc. These should all be considered during the process of selling the business.

  1. Signing key documents

They are many important documents to be signed during the process of selling your business, one being the share purchase agreement.

  1. Completion and post-completion

The business is now owned by the buyer. A lot of filing on their end will follow.

 

How long will it take?

The question of how long it will take to sell your business can vary – a basic timeframe would be around a year; however, this can change depending on many factors. These include:

  • The price of your business

E.g. if you put your business up for sale below the asking price, it will sell much quicker – however, this is not recommended unless you need the money quickly)

  • What the market is looking for

It could be that the market is saturated with the type of business you run, so therefore your business would take longer to sell. On the other hand, the market may be scarce with your type of business, meaning you could bump the price up and have a sale put through relatively quickly.

  • The way you choose to sell

It could be that an agent would be able to find a potential buyer quicker than if you were to sell privately.

 

If you are thinking of selling your business, then do not hesitate to call us on 033 000 20010 or complete an enquiry form here: https://costs.greenjellyfish.co.uk/contact/ and we would be happy to discuss your options with you.