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Selling a Company: Making sure the deal goes through.

Ignore These Rules at Your Peril

Ignore These Rules at Your Peril

It is not unusual for an offer to buy a private company to start brightly and then fall part as negotiations begin in detail. This might well be because the reality of the deal does not work for one of the parties involved, but often a lack of preparation by the seller makes delay and even failure almost inevitable.

There is nothing more frustrating than a sale process that fails to make progress. Or worse still buyers that show initial interest and then withdraw. As an experience UK business broker we put a lot of effort into getting clients ready for the hard work necessary to get from an initial offer to a completed deal. We always ask clients to consider this list of rules for a smooth and orderly sale process. Following our ten commandments may not guarantee a completed sale, but they will dramatically increase your chance of seeing the deal through to a conclusion.
 
Our 10 Commandments For A Smooth Private Company Sale Process
 
Reasonable Price Expectations

Have a reasonable price expectation for your business. Setting the asking price too high turns off potential buyers. Most will not get past the initial inquiry and be reluctant to return even if you reduce the asking price.

Focus On The Business

Keep your focus on running the business. The selling process will take at least six months and buyers need to see a healthy business.

Specialist Advisers

Appoint advisers that specialise in selling companies. Don’t be tempted to use a solicitor you are familiar with if he does not specialise in company sale and purchase contracts. Use a broker who makes his living buying and selling companies, not an accountant or consultant who dabbles in occasional company sales.

Advance Preparation

Prepare for the sale in advance. Make sure your accounts are ready for recent years and get any problems out of the books or legal records. Spruce up the premises and assets.

Document Collation

The buyer’s accountants and solicitors will require access to all your companies records and contracts during due diligence and contract preparation. Anticipate the buyer’s information needs and have things ready. This will avoid delays as you prepare information.

Create Competitive Tension

To get the best price you will have to create buyer competition, or at least the illusion of competition. Make sure your broker is marketing the company widely enough to achieve this. Beware of brokers who rely solely on advertising. You broker should research and contact other companies that could be a good fit with yours.

Keep Your Options Open

Be open-minded about the deal structure. If you insist on all-cash at the closing, won’t accept any contingent payments, or insist on a share sale, your options will be limited. Depend on your advisers and their knowledge to craft a safe and tax efficient deal.

Flexibility In Negotiations

Be flexible in negotiations. If you insist on getting all your own way buyers will soon lose interest.

Set A Pace

Maintain momentum in the deal by setting a schedule to work to and pushing advisers to meet deadlines.

Handover Support

Be willing to stay involved for a period after the sale. Even if fatigue is the main reason to sell your involvement will be for a limited period, and less stressful now you are not the ultimate decision maker.

 

If you are interested in finding out more about these and other issues relating to the sale of a private company one of our business sale experts would be delighted to talk to you in complete confidentiality. Click CONTACT ME to book an initial phone conversation or call us on 01604 432964.

 
We welcome comments on posts, and questions from our readers. Use the “Leave a Reply” box below. We answer all reader questions within 24hrs. If you would like to be informed about new posts on the theme of selling a private company click the “Subscribe” button at the right hand side of this page.

One comment on “Selling a Company: Making sure the deal goes through.

  1. Pingback: Selling a Business: Why do sales fail to complete? | Select Business Sales

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