Looking to sell your business but not quite sure how? Thinking about a 5-year exit plan?
Depending on the nature of your business, there are different ways to go about selling it, but one thing remains the same: it always starts with a conversation.
Seeking a third-party perspective, whether that is your accountant, business advisor or a friend who has gone through the process before, is vital to figuring out the best way to exit your business. It pays to get several views and, of course, professional advice.
You could sell to a private equity company if a share sale, a third party, a trade sale or even to your key employees.
Do you want to sell and walk away, or sell part and stick around for the upside? How about an earnout?
No matter how you are set up; sole trader, business partner or a limited company, making sure your books and accounts are up to date, and your legal paperwork is in order will make the process a lot smoother, especially when it comes to what is called Due Diligence.
This is when the other side’s lawyers, accountants and advisors crawl over your books, records, and other documents to make sure what they are buying is sound. It is a bit like buying a used car, but they can attach warranties to the deal in case something comes back to bite the buyer. This means they can then knock on your door!
Being prepared makes all the difference and reduces stress and anxiety. We can help prepare management accounts and refer you to other specialists who can build a financial model or act as corporate financial advisors. Having the right people wrapped around you is key.
But selling your business also means talking about tax!
For example, you will have to pay Capital Gains Tax (CGT) on the sale of the shares in a limited company, but you might qualify for Business Asset Disposal Relief, which reduces the amount of CGT you have to pay to a lower rate of 10% (subject to various qualifying conditions). Being set upright, and well in advance, may help plan for this and the way you exit also. Be warned, there are nasty stories out there where people have sold in the wrong way and disqualified themselves from the 10% tax rate, especially in limited companies!
Whether it’s the sale of a small family business or the sale of a large corporate, we have been involved in several over the years.
If you are looking to sell your business and are unsure where to begin or what process would be right for you, drop me a message and let us set you on the right path.
The above article is intended as a general information guide only, and you should seek specific advice for your own circumstances. I would be happy to discuss your circumstances and explore engaging you as a client.
