Ten things to consider when selling your business

Having just worked with a client on a successful trade sale, I thought it might be useful to put down a few key points to consider from a financial point of view:   If you’re thinking of selling your company, starting your preparation early is essential. Make sure your record-keeping is immaculate – a potential buyer is likely to want to see three years trading records. Make sure everything is fully recorded, meetings minuted and key emails filed somewhere accessible. Look at your monthly reporting pack. A trade sale may well be the first time anyone outside the business (apart from perhaps auditors and your bank) will have seen your monthly management packs, so they will need to make sense to outsiders. Does it make sense? For example, commentaries should avoid acronyms and company-specific jargon. Management accounts should be complete and fully reconciled to the statutory accounts. If you have taken advantage of the removal of the requirement for SMEs to have an annual audit, it’s well worth while reinstating it. An audit might seem like an unnecessary expense at the time, but the extra due diligence costs will cost a lot more later on. Make sure the numbers are tight and our balance sheet doesn’t contain any surprises. The sale price will be based on a multiple of historic earnings, so adjustments resulting from changes to provisions and accruals, property revaluations and stock write-downs will all need to be explained. Far better to get as much bolted down before you start the sales process. Building trust between the parties is more important than squeezing a few thousand more...