The large majority of private businesses will never sell often because they are not built to sell and don't ever intend to sell.
A more important and relevant statistic: Less than 20% of small businesses that are listed sell.
Reasons Listed Businesses Don't Achieve a Sale
Firstly, the percentage is brought down by a great deal of chancers. Chancers list their business for an unrealistic valuation with unrealistic expectations just in case they get lucky and find a naive buyer.
Secondly, there are a great deal of false adverts listed to attract additional leads and collect information from prospective buyers, while also attempting to demonstrate that they (brokers) have more businesses for sale than they actually do.
Thirdly, many businesses are sold directly and without the need ever to be 'listed'
I make these points to demonstrate that the statistics are not as scary as you may initially think.
The final point, the area that we can influence and assist with in this blog; sellers lack the relevant education and experience to execute a successful sale.
This blog will cover the latter point and share why we believe it is essential to educate sellers before going to market.
Three key areas
Preparation
Plan
Execution
1. Preparation
Firstly, a plan. What are you going to do once the business is sold? Why do you want to sell the business? Can you achieve your desires with the sale of the business? What are you going to do to achieve your desired outcome?
When selling your business, consider conversing with your financial advisers, accountants, business brokers, solicitors, tax advisers and additional sector-specific consultants.
These conversations will help build a picture of what you need to sell the business for and on what terms to achieve your desired outcome. They will also begin to give you an insight into what to expect for the sale process.
If your business is not in a position to sell and will unlikely achieve the financial targets you have in mind, there will be work to do!
Working with a preparation-for-sale consultant or experienced business broker will provide strong returns on any time and money invested. They can guide you towards the most high-impact activities to transform your business to be ready for sale. If you're looking for assistance with preparation for sale, we have a useful downloadable guide here to help you get started.
2. Plan
Now that your business is in a position to sell, you can consider expected timelines, costs, additional workload, and potential complications.
During this time, it is best to ask your professional advisers as many questions as possible to gain a good understanding of what the next steps look like. Being prepared and educated will put you in a strong position to execute the sale successfully, with as few surprises as possible.
Planning the best time to take your business to market can vary greatly from business to business. You may have a long cruise planned, a family commitment, or a recent key person leaving your business. There will be no perfect time to sell your business. However, you can plan forward and speak to professionals to understand when a good time would be to sell.
Understand that when selling your business, you, as the owner, will have an increased workload and likely emotional load. You must do your best to continue operating your business as usual during this process.
3. Execution
By now, you've prepared your business for sale. You've planned this stage and feel confident with your new learnings and deal team by your side.
The execution stage will have many elements of uncertainty throughout. Rely on your deal team to advise and move forward by removing the emotion from the deal.
As you have taken the time to position your business in the best light and are prepared for the inevitable time wasters, deal structures and long list of questions, you can take this in your stride and power through every stage of the process.
You know your desired outcome, you know that it's realistic, and you know how to achieve it.
All of this will provide positive momentum and give you a far better chance of a successful sale.
Conclusion
Attempting to sell your business, whether DIY or with a team, will be far less successful without proper preparation and education. Be cautious, though, as some brokers will advise you otherwise, charge substantial upfront fees and leave you listed with little attention.
Many business sales fall apart due to surprises that the seller was unaware of before entering into the process of selling their business. Spend the necessary time learning and you will have a far better chance of success going forward.
If you're looking to sell in the next 3 years, get in touch for a confidential conversation to understand what a sale may look like for you and your company.
Email: Office@thinkacquisition.com
Number: 02920 025 852
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