Top 5 tips for selling your business

For many financial planning business owners the sale of their business, either by trade sale or succession, is the realisation of their most valuable asset. It’s a once in a lifetime decision and you can’t afford to make a mistake. One of the unique features of the financial planning profession is the strength and trust of the relationship between adviser and client. It’s this unique relationship that makes every business different, even in small ways.

1. Get professional help. Professional assistance can save you time, provide objectivity in assessing the value of your business, create multiple options, and act as a non-emotional filter between you and potential purchasers. History has shown that when owners and purchasers negotiate directly it becomes personal and objectivity is lost.
2. Develop a strategy. Developing the right strategy should address issues such as: timing of the sale and the duration it may take; marketing; profiling the “right” potential purchasers; agreeing the negotiable and not negotiable items; price range, terms and conditions sought; and establishing realistic expectations.
3. Preparation. Prepare a comprehensive business profile or information memorandum. This document should contain as much information about the business as possible. It should provide the reader with a good understanding of the history of the business, its key people, clients and method of operating.
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4. Develop criteria for potential purchasers. Firstly make sure you only see those prospective purchasers that meet your criteria that you develop at the strategy stage. Secondly don’t meet with anyone until you have a good insight into their business. The initial meeting is not the time for negotiations but rather one for each party gaining a greater insight into the people involved, their backgrounds and future aspirations.
5. Negotiable and non-negotiable items. Decide before you meet a potential purchaser what is negotiable and those things that are not negotiable. Knowing what is “not negotiable” can save substantial time as it can be encapsulated with the business profile and it makes it easier to reject an offer that “doesn’t quiet feel right”. Set a realistic price, timeframes terms and conditions. Remember you are protecting all stakeholders, you, your family, your clients, your staff and your business relationships.

Why deals fail

• Cultural misalignment
• Unrealistic expectations
• Lack of preparation
• Owners negotiate
• Intimidation
• Timeframes
• Poor communication
• Finance
• No professional help
• Unsure of journey
• Under resourced