Is there a good time to sell your business?

There are many questions to consider when asking ‘when is it a good time to sell my business?’ – what are the key risks? How are these risks mitigated? Find out below

CREDIT: This is an edited version of an article that originally appeared on Insider Media

2023 has been a concerning year already for SMEs owing to the number of uncertainties, including volatility in the value of the pound, rising interest rates, potential soaring costs in raw materials, energy and labour, staff shortages and persistent supply chain issues. And yet the M&A market remains incredibly active. With the recent Budget Announcement sharing the details for the years ahead, many business owners are now looking to the future and considering what to do next.

So, is now the time to push for growth in your business? Does your business need a fresh injection of capital? Are the shareholders happy to remain as principals or is now a good time to consider selling your business? Timing can be a crucial factor; however, method and approach are equally as important. 

When a business owner considers transacting, it is essential that it is done in good time and all factors considered. In the case of a business sale for example, owners should consider their business in both financial and non-financial terms and put themselves in the seat of a potential buyer or investor.

You may want to consider: What are the key risks facing your business? How are these risks managed and mitigated? Does the business have any areas that need development and critical improvements made ahead of a due diligence process? 

Similarly, and to optimise the proceeds of any transaction, consideration should be given to corporate and personal tax. Is there anything that could improve the tax point and treatment which a transaction will attract, and what are the timing implications? 

It is also essential to consider what you as a business owner want from a transaction – is it a full sale or a partial sale? Are you happy to remain part of a business, with accountability to a new party? What is your minimum value expectation and how realistic is this?

Along with the strategic tax planning expertise which advisors can bring, scrutiny, critique and brainstorming of the above with seasoned deal professionals can be extremely valuable.

Too frequently, advisors are introduced to a transaction late in the process, often when considerable time and costs have already been spent and at a point where it can be hard and even more time consuming to unravel arrangements which may no longer appear feasible.

Engaging trusted business advisors in good time therefore can make a huge difference and their involvement can often prove extremely cost effective. Advisors may also be able to bring in several parties to a transaction with true strategic purpose that best fit the ambitions and goals for you when considering selling your business, and will allow you to maximise the value that you have built up and realise a return for the hard work that you, your employees, and stakeholders, have put in over the years.