A business that is not ready for sale - with exceptions - can be sold. But then the same applies as for a house that is sold as a handyman's house: it does not bring the top price. So when should you start preparing your business for sale?
Actually, as early as its inception. It's best to always have a business ready to sell, because you never know when an opportunity will come your way that you can't pass up, or an unexpected event that makes selling necessary.
Getting ready to sell means looking at your own business through the eyes of a buyer. What contributes to cash flow and what will a buyer see as risks? These are exactly the numerator and denominator of the formula used to determine the value of a business. So don't downsize when making sales plans, but rather step it up, and lower the risks a buyer sees.
Dependence on the business owner
The main risk a buyer sees with SME businesses is the dependence on the entrepreneur. This risk is reduced when an entrepreneur is able to make himself or herself redundant. This can be achieved by embedding knowledge and skills in the company's organization and securing business operations in work processes.
It takes time to accomplish this. A period of staying on with the departing business owner for a while longer, with a focus on handover, provides a practical solution if that process has not yet been completed.
Reliability of the business
Ambiguities and questions without answers make a buyer more risk averse. After all, the seller knows everything about his business; the buyer needs to find out everything. As a business owner, you make sure the records are a reliable source of information. You should be able to give the buyer the answers to all his questions on a piece of paper in no time.
The reliability of the business increases further by recording agreements in contracts and settling any claims, procedures and conflicts so that they no longer create uncertainties.
Optimization of the legal structure
The legal structure determines who the selling party is or can be and determines the tax settlement. With a capital divided into shares, such as in a limited liability company, the shareholder can sell his shares (share transaction) or the company itself can sell its assets (piece by piece) (asset transaction). With a sole proprietorship, there is no such choice; the company can then only be sold through an asset transaction.
Delivery of assets (piece by piece) makes the transaction more complex; the transfer of shares is relatively simple by comparison. Shares were invented for it.
Real estate is usually best placed in a separate limited liability company in a strategically convenient place in the structure.
When assets are sold, (profit) tax must be settled immediately (VpB by the company or IB by the IB entrepreneur). If there is a holding structure, the profit on the shares falls under the holding company's participation exemption and taxation is deferred until the holding company distributes to the private party. If the entrepreneur keeps the shares in private, then when the shares are sold, tax must be paid immediately for IB (box 2).
Optimizing the legal structure takes time and repairing it very shortly before the sale is often not possible.
You can't start sale-ready too early, but you can start too late.
