Key considerations for selling your business

For many, selling all or part of a business is one of the biggest decisions of their career. Sound planning plays a fundamental role in most business successes but after years, or even decades, of effort and dedication in getting to the point of an exit, unfortunately it is far too common for owners to be underprepared for a sale. Over half of business owners have not put a formal exit strategy in place, according to UBS[1].  

This can lead to less desirable outcomes for owners, such as selling the businesses in a manner that does not fully compensate them for their achievements or exiting at a later point in time than they expect. By breaking down the selling process into three parts – pre-sale, the sale itself and post-sale – this gives owners the best chance of getting what they want from the time, courage and attention they have put into making the business a success.

[1] The ultimate guide to selling your business | UBS Global

Sale

Selling a business is a complex process and one of the first key steps is calculating how much is enough - the vast majority of business owners have a minimum price at which they would sell. Three central factors can help inform this decision:

• Liquidity – The resources required to fund your desired lifestyle. Consider - other sources of income? increased/decreased spending going forward? Have you got a cash buffer for unforeseen developments?
• Longevity – The length of expected life after selling the business – Quite different for a 40-year old than a 70-year old.
• Legacy – What you would like to leave behind? This can mean quite different things for different people.

Answers can vary depending on the aims identified in the pre-sale phase. This differs depending on the owner’s plans going forward – retirement and travel require higher proceeds than if going into employment for another company.

Although these calculations can be quite technical – essentially determining the net present value of future family spending – the results can provide a huge amount of clarity not possible without completing the exercise. While it may show a shortfall between the attainable sale value and the desired amount, it can also do the opposite, allowing owners to realise they are able to sell sooner than they expected.

Exit Strategy planning are not regulated by the Financial Conduct Authority.

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Tax treatment varies according to individual circumstances and is subject to change.

The value of investments can fall as well as rise. You might get back less than you invested. You should only consider these products if you are willing to take some risk with your capital. We will consider whether such products are suitable for you before recommending an investment.

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