Starting or taking over a business was an important choice at the time: the beginning of entrepreneurship. It undoubtedly led to great opportunities and a successful business.
But now is the time, you want to slow down and sell a business. Disposing of the business is another important choice.
You will have many questions to answer. To whom can the business be sold (or transferred)? Is my business actually ready for that? In other words, is my business sales-ready? So what does sales-ready mean? In this article, we further outline what is involved in getting a business ready for sale.
What is sales readiness?
Actually, a business is rarely sales-ready. There are always improvements that can be made to achieve further growth. One of the first questions entrepreneurs often ask during the first meeting is, is my business ready to sell?
To determine whether a company is ready to sell, you as an entrepreneur must answer the question: are you ready to sell the company? This is a tricky decision and an awareness process that we will consider with you as an entrepreneur.
Then comes the question: but what is my company worth? Is that amount sufficient to realize the personal wishes, after selling the company. If the enterprise value is lower than you expect and thus the proceeds are not sufficient for the years after the sale, then you may wonder whether the enterprise is ready for sale. After all, it then may not yield enough for the years after the sale.
House in order
Crucially, the house must be in order at the time the sales process is initiated. In short, getting the business ready for sale in the best possible way. Here are a few things to think about:
- Are the financial numbers accurate and up-to-date. The potential buyer will want to receive not only the annual figures, but also the interim figures. In addition, it is good to have this information available accurately, but there will also need to be a close look at what costs are redundant. Can they not be transferred to the personal holding company or stopped and thus normalized.
- Which assets (asset) matters can be cleaned up on the balance sheet or transferred to the parent holding company(s).
- Are the contracts and agreements with customers and buyers still complete and what is the term still. Sometimes verbal agreements have been made, cannot be formalized.
- Are any permits and certification in order and what is the remaining term. Can they be renewed in the interim.
- Don't play issues that could be an obstacle in the sale. For example, legal disputes or other disputes. These need to be resolved first, because a buyer will always find something in there and it's exciting how that goes after takeover. As a business owner, you have no control over it after the sale while it is generally placed outside the acquisition. In addition, this is an issue in negotiations. You better get ahead of this if possible.
- Is the business independent of the owners and/or key people or can it be realized in the short term? Buyers find it exciting enough to take over a business and then if new management (from outside) is required immediately in the first three months then this is an issue. Make the business less dependent on you as the owner.
- When getting ready to sell, it is also desirable to look at the tax and legal structure. Changing the legal form can provide a tax advantage. However, this should be started early.
- How is the business performing compared to competitors in the region. Is the company doing better or less than the competitors. In short, where is the growth for the company.
- What is the added value of the company in the market and will this remain so for the party to be taken over? It is good to think about this before making a final decision to sell.
