Selling Your Business

When a business owner decides to sell their business, there is quite a process required if the value is to be optimised. The obvious things are needed such as the accounts being in a presentable fashion, preparing proper inventory and asset lists, tidying up legal and the like.

But what about maximising the value of the business. In a real way, not a window dressing way?

This is not about the method used to sell the business – broker, trade sale or staff/management buy-out. It is about transparent business processes and performance. The key is often how to:

  • articulate a strategy and plan for the business,
  • build a roadmap to get there, and
  • measure progress in a regular, fact-based, way.

If staff are aware of the plan, are incentivised to reach its goals, and actions towards a goal are measured, behaviours will usually change in a positive way. If an incentive scheme is correctly put in place, rewarding the positive behaviours, then the “virtuous circle” or “innovation circle” actions will become part of the company culture.

As these new process are put in place, Standard Operating Procedures (SOP) will change and need to be written down. That process itself will reduce key man risk, a major factor for someone wanting to buy a business.

The ideal situation is often to plan for a timescale of around 18 months. This is used to record progress against the plan to optimise the business for sale. If the above process is put in place, then the price for the company should rise for two main reasons:

  1. Revenue enhancement and cost saving projects will result from properly planned, incentivised, and implemented projects. This raises the demonstrable ongoing profitability of the company.
  2. The fact based reporting process maps actual progress against a plan. That series of reports gives visibility into the company. A buyer can identify more opportunities and therefore perceive greater value. This visibility decreases the risk a buyer must take, and reducing risk usually means increasing price – the multiple of earnings a buyer is prepared to pay.

In a nutshell this is the process that Oncore implements for clients wanting to maximise the value of their business.

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