The Business Exchange Swindon & Wiltshire Edition 38: Aug/Sept 2018 | Page 26

BUSINESS ADVICE Selling a business: when, how and avoiding the pitfalls When it comes to selling a business, there are some common themes that emerge but one of the more obvious ones – planning ahead and getting the business ready – isn’t often one of them. Richard Mathews 01793 538198 Swindon’s Optimum Professional Services are often called on by SME owners and directors for advice on selling a business, and note that more often than not the decision is provoked by an external event. Optimum offers both accountancy and legal services – a seamless service, all under one roof and ideal for anyone thinking of selling their business. Richard Mathews, CEO at Optimum, says: “Business owners rarely, actively make a decision about the timing of the sale, as the decision is usually sparked by an event. For example, they could have had a series of problems – perhaps with staffing, or customers, or family – and they decide ‘enough is enough’ and they want to sell up. In other words, in most cases a change of circumstance will make a business owner focus on a sale.” But Optimum’s advice is, where possible, to plan – and, if possible, plan at least three years ahead. Exact timing depends on the structure of the business in the first instance. If everything is on the shoulders of the business owner, then it will take longer to prepare that business for sale than if there www.elmworkspace.com 01249 819 419 is a strong management team in place who already help to run the enterprise. Richard adds: “Business owners should always remember a transaction can take at least 12 months and often longer to go through and a very high proportion – reportedly 80% – fail. “By getting all the ducks in a row – all the documents and business structure in place – then a business owner will have a far better idea about the transparency of a potential purchaser; it will be easier to quickly assess whether they are genuine or just fishing.” For SMEs, the most common sales routes are via MBO (management buy-out), MBI (management buy-in) or trade sale to a competitor. Businesses with turnover under £10m don’t tend to attract private equity. In general, the simplest route is via MBO, but each case has to be judged on its merits. The most common slip-up owners make is over valuation. A business owner will seek the advice of someone who isn’t planning to buy the business and then focus wholeheartedly on that figure. In reality, every business’s price is bespoke; even two identical businesses will go for very different www.allboxed.co.uk 01249 471777 prices. The value of a business is dictated entirely by the market opportunity the seller can create and business owners often find that a hard concept. Business owners often make the mistake of taking due diligence personally. During the sales process, owners will be questioned and challenged about their business in a way they may not have experienced. Often they aren’t used to this and they don’t like it. The mistake is to take it personally. Finally, don’t take your eye off the ball. Says Richard: “SME owners, to a certain extent, down tools as soon as they put a business up for sale, and often stop doing the important stuff like developing and growing their business. In fact, they need to change their mindset and remember they aren’t so much selling a business as looking for a buyer.” If you are thinking of selling your business, and need help and advice from expert accountants and lawyers, contact Optimum via email to [email protected], or visit www.optps.co.uk www.britanniaquickmove.co.uk 01249 813430 The Space Centre, Porte Marsh Road, Calne, Wiltshire, SN11 9BW 26 THE BUSINESS EXCHANGE 2018