Business owners regularly jump the gun when putting up the for-sale sign. This can often result in them having to rely too heavily on their business broker to help find potential buyers.
Unsurprisingly, this can lead to disappointment as the selling price hoped for becomes little more than a pipe dream!
It doesn’t have to be this way.
In fact, if you plan effectively it is not always necessary to use a business broker when selling your business. Using a business broker can often prove an expensive root to exit as they usually charge a sizeable commission for selling your business. This can be as high as 12% of the total sales proceeds depending on the size of your business.
Frequently when agreeing on a selling price, business owners quickly realise they will not achieve the amount that they desired. They feel that their companies are more valuable than the sale price being offered by the bidders.
A lack of preparation before embarking on a sale process is one of the most common causes for this value gap.
Prepare, Prepare, Prepare!
The value of the business should be immediately visible to potential buyers before they even get to due diligence. This enables suitors to better appreciate the asset they are purchasing to help make it more attractive and create FOMO.
Before engaging a business broker or M&A advisor, business owners need to dedicate sufficient time to preparing for sale to improve the likeliness of achieving the highest possible value for their company. Ideally, this preparation process should start at least two years before putting the up for-sale sign.
Business owners need to also ensure that they have enough capacity and expertise in the team around them as it is all too easy to underestimate the time commitment. Continuing to run the business uninterrupted and manage the additional deliverables is typically more challenging than first expected.
Furthermore, be aware that selling your business can also be a very emotive process and it can at times prove challenging for a business owner, or the management team, to objectively self-assess their company. Having an independent view to give perspective can be very beneficial.
Business brokers and M&A advisors are generally able to help you identify potential buyers and help manage the actual sale process. They help to develop marketing material including teaser, information memorandum, data rooms, etc. They will also help guide you during meetings with potential buyers.
We Are Here to Help!
At H&Hendricks, whilst we are not business brokers or M&A advisors, we are able to help you target value creation opportunities before putting up the for-sale sign. We help business owners to maximise the value of their companies and make them more attractive to future buyers.
Our Trusted advisors work closely with you to identify areas of your business that can enhance its value, leveraging our expertise in finance, operations, and governance.
We offer the following services to help companies prepare for sale:
At H&Hendricks, our expert team is ready to support you with your most promising opportunities, and biggest challenges. We will help you to achieve your business ambitions and increase the overall value of your company.