At JPAbusiness we have been advising our clients on their succession plans, business value and exit strategies for many years now.
Being involved in selling businesses and also conducting due diligence and negotiations on acquisitions for our clients, we see the best and worst of how business sales transpire.
As we always tell our clients, selling your business is not an exact science; it’s about planning, professional marketing, timing and finding the right match regarding value and terms.
So, as we have seen and experienced a few ‘war stories’, we decided to turn these learnings into Do’s and Don’ts for business owners looking to sell a business – just a few tips from hard-won experience and observing what can happen in the business selling market!
This week we explore number 1 on that list:
1. DON’T – Spend valuable money on advertising without having a professional business information memorandum (IM) prepared
DO – Provide credible information
A critical rule of selling a business is that owners need to put together professional, credible, robust information about their business.
Selling your business is about trying to get someone to share the same or better perspective on your business that you have.
Often as a business owner we take things about our business for granted, things like:
- customer base
- supplier network
- product design
- business structure
- team of people
- business relationships
- market
- financial performance
- risks associated with the business.
Knowing all these things is critical to a purchaser accepting the value of a business.
It’s also important that the information you provide is not just about the business’s current or past performance, but about its future performance as well.
Ultimately the person is buying the business for its future performance and that's what valuing goodwill is all about – it’s about assessing business maintainable earnings (BME) into the future.
If you would like advice or support to sell your business, contact the experienced team at JPAbusiness for a confidential, obligation-free discussion.
From the JPAbusiness archives, refreshed and checked for accuracy November 2016.
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James Price has over 30 years' experience in providing strategic, commercial and financial advice to Australian and international business clients. James' blogs provide business advice for aspiring and current small to mid-sized business owners, operators and managers.