Planning Vital for a Sale; Lucas Markou, Tax Partner at Jerroms, Looks at the Vital Facts to Bear in Mind When It Comes to Selling a Business
Byline: Lucas Markou
The last three years has been a difficult time for owner managers and other business owners looking to exit.
Business values have suffered from the aftermath of the banking crisis and the recession, not to mention the threat of further economic troubles.
Profits, the key driver for business values, also fell back for many and the number of potential buyers has been limited by aversion to risk and the continuing lack of availability of bank finance.
On the other hand, many companies are seeing a future of improved earnings, having cut costs and eliminated unprofitable non-core activities.
The prospects for selling a business are likely to improve in the future, though vendors will have to be realistic in their asking prices for the foreseeable future.
Selling a business is a different skill from running it and professional advice is essential for what is usually a oncein-a-lifetime deal.
In any event, the key for realising value in an exit is early planning.
For example, if the vendor wants to retire completely, he or she may need to relinquish some of the levers of control so that there is a broadly based management team prior to sale.
Secure and robust customer relationships can be vital in a sale and can take years to build.
To achieve a good selling price for the business, vendors will need to show that the customer links are secure and that markets for products are robust with strong projected margins. …