Preparing and optimizing a business for sale
As an entrepreneur, are you thinking of selling your business? Besides being a once-in-a-lifetime event, selling a business is a complex process that involves many intricate steps. In our experience, good preparation is essential and also forms the basis for the strategy and execution of the sales process. A business that is well prepared for a sale delivers a number of benefits:
– A higher sales price
– Greater chance of a successful transaction
– A faster process
– Fewer risks
But how can you prepare your business for a sale? Here are some tips to further optimize and prepare your business for a future sale:
Have a clear strategy and vision for the future of your business
Having a clear strategy and vision for the future of your business is very important. Document this in a clear and concise strategic plan. The financial effects of strategic decisions are recorded in a budget and financial plan. Buyers are looking for healthy companies that present well financially and are also well organized, as this inspires confidence among potential buyers.
Create a strong management team
Try to reduce dependence on the Director-Owner (DGA) by creating a strong management layer in your business. This will improve the transferability of your business. Continuity is a key factor takeover parties look at. The lower perceived risk, the higher the sale price. Additionally, lower risks will attract more interested potential buyers, both strategic and financial parties.
Optimise the P&L and balance sheet
A potential buyer will take a deep look at the financial health of your company. Therefore, it is crucial to make the financial situation clear and transparent through clear financial reporting, a budget and a financial plan. Moreover, it is important to optimize working capital, for instance by critically looking at inventory, debtors and creditors. Tight working capital management can not only improve your company’s liquidity, but also provide insight into the actual working capital needed in the future, which may lead to a higher selling price.
Optimize legal and tax structure
The right legal structure makes for a simpler transfer and can also reduce tax implications. Do you also own the real estate from which the business operates? If so, a so-called three-tiered structure, with a holding company, real estate company and, below it, the operating company. This ensures flexibility. Revising the legal or tax structure takes time, so it is important to get proper advice on this beforehand. Deadlines for such changes can be as long as three years, so starting early is essential! At Sophista, we can help you prepare and optimize your company for a possible sale. Contact us or visit our office for conversation over a cup of coffee.