As a business owner, selling your company is the culmination of a lot of hard work and investment, both in terms of time and money.

The sale of your business is likely to be a key part of your financial plan, whether your goal is to fund your retirement or pursue a new business venture.

As a result, the sales process can’t be left to chance or rushed. Instead, it needs to be carefully planned – ideally over a period of at least five years before your intended sale date.

Read about seven important steps you need to take in the lead up to the sale of your business to ensure it runs smoothly and helps you extract the maximum value.

1. Start planning earlier than you think you need to

There is no perfect time to begin preparing your business for sale. However, in our experience, it’s almost always better to start too early than too late.

Even an outline plan is far better than no plan at all. Selling a business is rarely something that can be done successfully at short notice, and the more time you give yourself, the more opportunities you’ll have to strengthen your position and maximise the value of your company.

Starting the process early allows you to:

• Focus on the financial performance and demonstrate sustainable growth
• Identify and deal with any weaknesses that could concern potential buyers
• Build a consistent track record of strong performance
• Make strategic business decisions with your eventual exit in mind.

All of these can help enhance your business’s value and put you on the front foot from a sales perspective.

Preparing well in advance also gives you valuable flexibility, so if your plans need to change, you’ll be in a much stronger position to adapt. You could deal with an unprecedented personal issue, necessitating a delay, or take advantage of a short-term sale opportunity which requires you to move quickly.

2. Get a clear idea of how much your business is worth

As part of your early sales planning, you should have your business valued and assessed by an independent analyst.

This will give you an immediate idea of the figures you are working with and how those values are derived.

It will also provide you with insight into the strengths and weaknesses, so you can take steps to deal with any outstanding issues that could affect the sale price.

Beyond the headline purchase price, there are other factors you need to consider. For example, are you prepared to accept a lower offer price from a more suitable buyer? Work out what you’re willing to accept and the things you won’t compromise on, along with what your business is worth financially.

3. Maintain clear financial records

Financial information will be key to the successful sale of your business. Accurate, transparent, and well-organised accounts will help inspire confidence in your potential buyer and make the due diligence process significantly easier.

As discussed, starting the process early is important, and you can adopt good record-keeping habits if you haven’t previously done so.

Clearly, it will be advantageous if your records demonstrate consistent revenue and healthy profit margins. It will also be important to show that you have rigorous financial controls in place.

If you haven’t already, we recommend scheduling regular reviews and discussions with your accountant to ensure your reporting reflects the business’s underlying strengths as clearly as possible.

4. Understand how integral you are to the success of your business

The success of the business is likely to be closely linked to your knowledge and expertise, and the relationships you have developed with customers and suppliers.

The other side of that coin, however, is that your integral role can present a challenge when it comes to selling the company.

A prospective buyer isn’t just assessing how well the business performs today. They’re considering how it will perform after you’ve left. If your business is overly reliant on your leadership, knowledge, and skills, it may be perceived as a risk by any purchaser, and this could affect the amount they are prepared to pay.

Because of that, part of your planning process should be to review how dependent the business is on you and identify ways to reduce that reliance between now and when you sell.

The more confidence a buyer has that your business can continue to thrive without you, the more attractive the opportunity is likely to be.

5. Assess your customer and supplier relationships

If your business is overly dependent on a single customer or supplier, it could be seen as a commercial risk and have a detrimental effect on the sale price.

Where possible, you should look to diversify your customer base and strengthen relationships across a broader range of clients.

Likewise, reviewing your supplier agreements can provide additional reassurance to your prospective purchasers.

By ensuring that all contracts are well-documented and that you have a diversified revenue stream, you can make your business more attractive.

6. Prepare your business for due diligence

Potential buyers will undertake a thorough due diligence process before committing to a purchase.

They’ll want to understand every aspect of your business, including the financial performance, legal structures, and regulatory and compliance processes you have in place.

Any unresolved issues uncovered during this review could slow negotiations and even jeopardise the sale.

That’s why it’s important to ensure your business is well prepared long before it goes to market.

Having robust legal and regulatory processes in place can give buyers confidence that the business is well-managed and that no unexpected risks are lurking.

7. Think about what happens after the sale

After investing years, and often decades, into building your company, stepping away can bring a mixture of excitement, opportunity, and uncertainty.

That’s why it’s important to spend time thinking about what happens after you leave the business, and not just the sale itself.

Whether your plans involve retiring, spending more time with your family, or even launching another business, giving yourself time to think about what’s next can make the transition much smoother.

Working with a financial planner before the sale is complete can help you understand how the proceeds fit into your wider financial picture.

Get in touch

If you would like to talk to us about your business plans, please get in touch.

Email us at clients@iqf.ie or call 353 71 915 5560.

Please note

This article is for information only. It does not constitute advice.

It describes the financial planning services iQ Financial can offer you. Financial planning services are not regulated by the Central Bank of Ireland.