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Selling your business is a significant decision that can have lasting financial, and personal implications.
Whether you’re planning to retire, move on to new ventures, or capitalise on years of hard work, proper preparation is essential to ensure a successful and rewarding exit.
Here are our top five tips for owners contemplating a business sale.
1. Start Planning Early
One of the biggest mistakes owners make is leaving the planning too late. Ideally, you should start preparing at least 1–2 years before you intend to sell. This allows time to get your financials in order, streamline operations, and address any issues that could negatively affect the business’s value. An early start also helps to structure the business in a way that’s attractive to buyers — such as reducing owner dependency, strengthening recurring revenue streams, and ensuring key staff are ‘locked’ in place.
2. Understand the Value of Your Business
Many owners overestimate what their business is worth. A realistic valuation is critical not only for setting expectations but also for working with your Financial Adviser on how much you need to enjoy your retirement. Valuation methods vary depending on your sector, size, and profitability — the most common approach is a multiple of EBITDA (earnings before interest, taxation, depreciation and amortisation).
At Elephant’s Child we can provide you with a complementary indicative valuation as a valued client of Wren Sterling.
3. Get Your Financials in Order
Buyers will want to scrutinise your financial records thoroughly. Ensure your accounts are up-to-date, and accurate. Clear financial records make your business more attractive and reduce the likelihood of a deal failing during due diligence. It’s also advisable to have detailed forecasts, customer contracts, and operational documentation readily available to present a transparent picture of future performance. Remember, for the acquirer this is a decision based on the return that they will produce on their investment.
4. Assemble a Strong Advisory Team
Selling a business is complex and involves legal, tax, and financial considerations. Engaging experienced advisors, like Wren Sterling and Elephants Child, who have supported many businesses through to exit, can help you to understand how much you need, maximise value and navigate the sale process. We can also help you identify the right approach, whether trade, private equity, or a management buyout.
5. Think About Life After the Sale
What’s next for you once the deal completes? Many business owners underestimate the emotional and psychological shift that follows the sale of their company. Whether you plan to retire, start another venture, or take time off, having a clear post-sale plan can provide purpose and direction. It’s also essential to understand the tax implications of the sale and how to manage or invest the proceeds.
Selling your business is likely to be one of the most important financial events of your life. With careful preparation, the right professional support, and realistic expectations, you can ensure a smooth transition and achieve the best possible outcome for your business and your future.
