Selling a business in the current climate is difficult but with careful planning and good advice you can maximise your position and achieve the best possible deal.
Valuing the business for sale is a difficult process.
“You will no doubt probably have heard the old saying that a business is only worth what somebody will pay for it”.
This, to a certain extent is true in that the business in the hands of one buyer may be worth a lot more than in the hands of another. Accountants look at a number of factors. A popular way of achieving an initial value is to look at the profitability of the company, obtain a weighted average, make adjustments for any extraordinary items, and then apply a multiplier to arrive at a business value. The multiplier will very much depend on the type of business and how marketable that type of business is at any given point in time. There are more sophisticated valuation methods but taking the adjusted profits and applying a multiplier will certainly give a good indication of value.
Be careful when choosing an adviser
You may also wish to appoint an independent corporate finance expert who specialises in the sale of businesses. It may be the case that your business specialises in a specific area and a particular broker may be best placed to deal in this area. Company sales specialist’s operate in lots of different ways and the most common way is to charge some form of up front fee along with a commission on successful sale. It is very important to ensure that you appoint the correct adviser otherwise not only could you get a poor service but you could end up being charged a significant amount. We would be more than happy to discuss on a no obligation basis the different types of business sale agents and brokers available and try and offer you advice and assistance to ensure that you appoint the correct person.
When you are looking to appoint a legal adviser to act for you on the sale of your business please ensure that you appoint a specialist business lawyer. A corporate lawyer must be able to show that he has dealt with similar transactions in the past and show a good level of experience otherwise you may leave yourself open to attack.