WHY SELL?
“It is vital to begin planning an exit at an early stage if it is to be a success” The Institute of Chartered Accountants, October 2005.
Whilst planning for a sale a number of years in advance of going to market is the ideal scenario, the practicalities and sometimes harsh realities of life may not always allow for this.
In our experience, sales are normally conducted for one of the following reasons:-
- A planned retirement.
- Sickness / ill-health.
- Restructuring/ rationalisation/winding down towards retirement – selling off one or more outlets or branches.
- Lifestyle & work-life balance issues.
- Emigration.
- Declining profitability or the threat or presence of new competition – e.g. a general store owner may sell because they have heard that a Tesco local store is planning to open nearby soon.
- Divorce.
- Insolvency.
- Probate.
- Dispute or fall out within a partnership.
- A sale to raise cash to acquire a larger business (or sometimes smaller one that they can use their experience and expertise to streamline, improve and sell at a profit (AKA a serial entrepreneur!)).
- An individual or company has made an attractive offer or approach.
Timescales, expectations and background to a business sale
Each business sale comes with a story. Some business owners are able to sell from a position of strength, others are forced to sell from a position of weakness.
Before commencing on the sale process, it is important to assess your own circumstances to help you decide how best to approach your sale and what you can realistically expect to get out of it. A couple of examples may help to illustrate this more clearly:-
- An owner with a serious long-term illness may need to sell quickly because in their absence, the business may be declining rapidly in terms of sales, profits and therefore the corresponding achievable sale value.
- In contrast, an owner working towards a planned retirement may have no urgent pressure to sell. The business may be performing well and the owner may have the luxury of waiting for the right price and terms from the right kind of buyer. Indeed whilst waiting and marketing their business, they may be happy to continue to make good profits and to top up their pension!
