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