Getting a good price for your company takes planning and insight.
There’s no one route to selling your business, but there are actionable steps that will help you set up robust financial systems to get the best deal. Not having good, detailed management information is a common mistake for owners who are aiming to sell up.
If you don’t have detailed accounts, a handle on your cash flow and a good overview of your marketplace, you can’t be sure what’s going on in the business – and many business owners find they don’t understand the financial detail of their business as well as they thought.
Do the due diligence
Simply put, due diligence is a test of value to validate any offer made for buying the business and to build detailed information on the business. It also seeks to validate key assumptions made in any offer – or to uncover issues that would lead to a change in the offer – including valuation.
Owners can often learn a great deal about their business and finances if they go through a “dry run” of the financial, tax and legal due diligence process that any buyer will undertake.
The risk within your business
What would happen if you lost key customers, suppliers or employees? If your technology failed, your markets changed, or new regulation impacted your business? If the risk in your business changes, so does your value.
Having knowledge, information and an assessment of risk readily available is crucial, as it suggests you’re a well-run business. Interested parties are far more likely to pay more for a company that looks professional, manages its risks, and stays stable and well-organised.
Having access to good advice adds value.
A broker will just match buyers with potential sellers, but an experienced advisor gives you broader advice and a deeper level of insight, especially when they work with similar businesses.
With a good business advisor and insightful management information, your business is always well positioned to react to unexpected changes in the marketplace.
The price is right
If your ambition is to achieve a certain minimum value for your business, you’ll want an expert opinion on whether that’s a realistic value, what its value might be today, and how to bridge the gap.
An advisor who knows your business well can give you a much clearer indication of the value – and any areas where improvements could, potentially, be made.
With a bit of homework, and the right focus on adding value, you can increase what buyers are willing to pay – and even exceed your value expectations.”
The Brexit Effect
Haines Watts GGI Partner firms in Europe discuss the impact of Brexit beyond the UK.
The business risks associated with Brexit include declining investment activity, border controls, customs issues and restrictions on the free movement of workers. – Anders Mortensen, Dansk Revision Randers.
The UK’s exit from the EU is also having a significant impact on businesses on the Continent. With this in mind, Haines Watts asked two of its partner firms in Geneva Group International (GGI), a global alliance of professional services firms, for their thoughts on changes to the European Union.
Delays and depreciation
In Germany, Hamburg-based legal, audit and tax consultancy NBS Partners has German clients with UK subsidiaries and also looks after the German subsidiaries of UK parent companies. Partner Boris Michels says Brexit affects the firm and its clients in various ways.
A hard Brexit may depreciate the GBP by 25%, which will have far-reaching consequences. Imports and exports could be significantly affected; it’s estimated that British companies could lose up to £30 billion in exports. Germany’s exports, for example, could be up to ¤8 billion lower than usual. This will show up in the financial statements of our clients and in their cash.
If restrictions are placed on freedom of movement, some EU citizens may no longer be able work in the UK without any problems, which, puts many jobs at risk.
There are also questions over the potential impact of customs delays on just-in-time production processes, including a potential 30% fall in property valuations and whether relocation is an option.
For Anders Mortensen, a partner in Danish audit firm Dansk Revision Randers in the eastern part of Jutland, the business risks associated with Brexit include declining investment activity, border controls, customs issues and restrictions on the of free movement of employees.
It’s a great concern in Denmark because the UK is one of our biggest markets. I have a lot of customers who are very concerned about how it’s going to be managed practically. For example, the paperwork in the first two to three months after Brexit is going to be a nightmare if you have to export into the UK.
What we would like from a Danish perspective is to get to a point where all the agreements between the European Union and the UK are going to make things the way they used to be and I believe to some extent that’s what politicians are trying to achieve, while still maintaining British sovereignty.
That’s where the challenge is because from a business perspective, I believe the European Union has been working really well.
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For more information on selling your business, find and contact your local Haines Watts office