Two key components in selling a business…
We’re often asked the best way to sell a business. There are two key components at play in the sale of a business:
- Structuring the transaction, and
- Positioning the business to the market.
Both elements are important and can significantly impact your result.
Structuring the transaction covers things such as:
- pricing the business,
- terms and conditions attached to the sale,
- key terms in the contract, and
- ensuring the transaction structure is as tax effective as possible.
Much of the structuring is about ensuring the vendors secure the most efficient and effective outcome from the sale. It is about maximising the vendor’s position.
Positioning the business for sale is all about ensuring that you achieve a sale and one that maximises your price.
It covers areas such as:
- Ensuring there are no hurdles within the business that will limit its saleability,
- Identifying the competitive position of the business within its market segment, and
- Ensuring that operating performance is as good as it can be, and that the business benchmarks well in its market.
Positioning also includes:
- Identifying the best time to take the business to the market,
- How to take it to the market, and
- Who the most likely buyers will be.
Positioning is about doing everything needed to maximise the probability of a sale occurring, whereas structuring is about getting the best outcome from a transaction once it has occurred. A lot of people make the mistake of spending most of their energy on the structuring of the transaction. It is important but it only becomes important if the sale is achieved.
To do this, you need to get an objective assessment of:
- how the business compares in its market,
- its competitive position, and
- what (if any) impediments to sale exist
These are all the things a buyer will look at, and look for, when they assess your business.
Securing a sale at the best possible price is about having your business positioned for sale. Preparation time is needed to achieve this so talk to us well in advance of putting your business on the market – we are experts in this field and would be delighted to help you achieve the best possible outcome for you and your family.