Tool Box
Issue No. 47 - June/ july
Right time to sell quality business
by Craig Stubing
Selling a business, or assessing a business for sale, is much tougher in prevailing economic conditions, when businesses for sale are under more intense scrutiny than ever.
This is a huge issue for baby boomer vendors. Lacking capital to develop their business, perhaps beginning to suffer ill health, many baby boomers will be looking to sell up and retire in the next few years. There is a clear ‘line in the sand’ between high-quality businesses and the rest which has never been so stark. Unless a vendor can ‘tick all the boxes’ listed below, potential buyers are likely to walk away.
Key issues for vendors to consider when contemplating a sale include the need to recruit regular business advisors to help with the decision and the sales preparation process.
The Accountant’s role
When preparing a business for sale the accountant’s role is more important than ever. An incredibly important “value add” service to clients is to:
• Create an analysis of trend lines
• (very useful if selling or not), paying particular attention to the following:
• Three years or more historical trending of sales, GP and expenses.
• The same on an up to date monthly basis as well (particularly given current market forces).
• Collecting meaningful data to determine and underpin why trend lines should improve • Provide ‘what if’ forecasts with different inputs - extremely useful to help the Vendor decide whether to hold or divest.
• Help clients understand and identify their customer base and if that customer base is growing or diminishing.
• Assess the impact of competition.
Key issues for business owners
These are general ease of operation and transferability issues:
• Preferably low owner involvement (this is very important).
• Extraction of the owner’s knowledge and intellectual property.
• Identification of skills required.
• A...
