Business sales – attributes and barriers – planning and stagnation

My third blog in this series on business sales looks at the history and ongoing plans of your business and the possible impact on its marketability.

Lack of forward planning and stagnation

The history of your business is key when a buyer is assessing the value they will be willing to pay for it.  The underlying trends within the business provide guidance as to how the business may perform in future. A steadily growing business, with all other factors being equal, is expected to continue growing.  A company with falling performance is, without further justification and explanation, going to be expected to continue falling.

It is important to be able to demonstrate that all your hard work over the years growing the business has not stopped in the run up to a sale.  A buyer will want to know that you have continued to develop the business, as you would have done if you were not selling it, to maintain the growth or to address any ‘short term’ deterioration in performance you may have experienced.

The timing of any sale is therefore very important to obtaining the best price.  Ideally you want to show consistent or increasing performance over recent years.  If you are therefore considering retirement or other business interests in the near future, you may wish to market your business before you start to lose the passion that has historically driven the business forward.

Each business is unique and it can be difficult to tell when it’s the right time to market your business.  If you are considering the eventual sale of your business, we would be happy to discuss the potential options open to you and how best to prepare for that sale.