Lisa Kennery, director at Blackburn-based business advisory and accountancy practice Pierce, says that when it comes to owners looking at a possible sale: “It is our experience that proper planning at the appropriate time will result in business value being maximised.
“Alongside maximising value, the planning will allow your advisor to ensure that tax arising on a transaction is minimised. It will allow you to extract any non-trading assets in the most tax efficient way.”
Stephen Gregson, corporate finance director at MHA Moore and Smalley, also emphasises that sale success is about “asking the right questions”.
He adds: “Whether you’re preparing to buy or sell a business, arguably the most important factor to success is sound long-term planning. The whole process needs to be an active and dynamic one and preparations should begin long before any deal begins to be negotiated.
“If you’re selling a business, it’s also crucial to have invested in the critical infrastructure of that business and specifically your financial control and reporting processes.
“Many business leaders see the finance function as a necessary evil, but you need to have solid, reliable, and timely financial information to enable you to clearly communicate the profitability and hence value of the business.
“But this isn’t just about looking into the past, it also applies to financial projections. The best run businesses will tend to have these already and they are sophisticated enough to be readily sensitised for different future trading scenarios.”
He adds: “While deals are often driven by the performance of the business and the outlook in a specific sector, nothing exists in a vacuum, and it is becoming increasingly important to look at the bigger picture and what’s happening across the economy and society more generally.”
That includes the growing importance of Environmental, Social and Governance (ESG). Stephen says: “If big businesses are dictating that organisations in their supply chains need to perform better from an ESG point of view, then to be attractive to a buyer, your business probably needs to think like this too.”
When it comes to actually doing the deal, legal experts stress that due diligence is a vital part of the process for those looking to make the purchase. Again, it comes down to asking the right questions to establish if and where there is risk.
Debbie King, a partner at Lancashire headquartered Farleys solicitors, says: “Depending on the size and complexity of the transaction, accountancy, tax and legal due diligence are likely to always be required, but commercial, IT, insurance, and operational due diligence may also be needed.”
Michael Barker, partner at Preston headquartered accountants and business advisors WNJ, says planning a proper exit strategy is vital for any business owner.
He says: “Putting one in place will help when it comes to decision making and will make the process, when it happens, easier and more profitable.
“The strategy you create then needs to be continually revisited to ensure it still fits with your situation and your personal goals, as they can change over time and depending on the performance of the business.
“Creating a clear exit strategy requires both time and care. Business owners need to be clear of their financial goals and how long they want to stay involved.”
He adds: “If your business has investors or other stakeholders, you need to keep them informed of your intentions and the strategy. When it comes to a family business it is important to talk – and listen – to those who will be affected by your decisions.”
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