Six business exit strategy tips to maximise your business sale

Category: Finance

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With a new study claiming that 76 per cent of business owners currently have no business exit strategy in place, here we bring you six hot tips to maximise the sale of your business, courtesy of RSM Bird Cameron. 

Andrew Graham, national head of business solutions at RSM Bird Cameron, says that even if owners are not ready to sell right now, a business exit strategy is something they should be thinking about so they are prepared when the time comes.

“At least three to five years are needed to properly prepare for the sale of a business,” he explains. “Business owners need to be aware of the impact of tax concessions, which ultimately reduce overall tax liability. This can have a fundamental impact on both the price the business is sold for and the ability to extract the maximum after tax benefit.”

Six business exit strategy tips

1. Prepare for the sale at least three to five years prior to selling

Start by getting the business independently valued and assessed so potential buyers can see what the business is worth, what the annual turnover is and how much tax is paid each year. Another consideration is how much capital gains tax will have to be paid when the business is sold and how a seller can go about minimising this. RSM Bird Cameron’s thinkBIG 2012 showed that 55 per cent of business owners are not aware of the tax concessions available on the sale of a business. ExitLG

2. Strengthen ties with key customers and draw up contracts where possible
Strengthening customer contracts is a great way of adding value to a business. Review your biggest customers and whether there is a contract or mutual agreement in place. Having hard copies of contracts with your customers will inspire potential buyers' confidence. Contractual revenue is worth more than uncontracted revenue.

3. Train staff to run the business without the owner being present
Having well-trained staff in place is of huge benefit to any business. Buyers will also want to know if current staff will stay on after the owner leaves. Profit and business performance should be attributable to the management team, not the exiting vendor.

4. Speak to staff about selling the business
Speak to staff about the sale of the business to ease concerns about their future and ensure the team is motivated, incentivised, accountable and locked in.

5. Prepare documents for sale of the business as early as possible

Having the relevant documentation ready early will show potential buyers that you are committed to ensuring the sale process goes smoothly and will assist in managing the due diligence process.

6. Do not sell if the timing is wrong

Be patient and be prepared to wait until the right buyer is found to maximise your sale value.

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