Business in Practice - How do I maximise the value of my business on sale?
Date of Issue: 12 March 2007
Business
in Practice
A regular column of general business advice brought to you
by Bates Weston, chartered accountants & business advisors.
Chris Jones heads the experienced corporate
finance team at Bate Weston. In 2006 his team completed
deals with a transaction value of over £75m.
Your specialist advisor should initially focus on preparing
information on the business that highlights its selling
points, financial performance and investment opportunities.
This will bring out the key value drivers having considered
carefully the acquisition criteria of potential purchasers. |
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Ensuring that all key buyers are included in the process appears
an obvious factor but one that is seldom achieved. We handle many
disposals where the ultimate purchaser is initially unknown to
the vendor, having been originated through our sector knowledge
and research.
Potential purchasers can come from a variety of sources, which
include private equity, quoted companies and private businesses.
Each will have its own methods for the valuation of targets and
justifying investment decisions to shareholders. Your advisors
knowledge of previous deals and current market trends can be invaluable
here.
Timing is crucial. There is no point spending months grooming
a business for sale, if by the time you are ready, the purchasers
have lost appetite. As most deals are based on multiples of profits
then performance levels need to be optimised. Often deals are
based on current run rates rather than historic trading. What
is important is how results reconcile to future income generating
potential. It is the future that is the basis for the purchaser’s
investment decision.
The sale of a business often means dealing with a much larger
purchaser. Your advisors need to be strong negotiators on your
behalf. They also need to ensure that the typical deal ‘wobbles’
are managed through to completion.
Assuming you ultimately achieve the desired sale price for your
business the last thing you want to be faced with is an excessive
tax bill. As part of the process ensure that you receive tax advice
that helps you minimise your capital gains tax. Often purchasers
are cooperative in helping you achieve a tax efficient outcome
based on sound advice from your corporate finance advisor.
If you would like to discuss the potential sale of your business
or have a question you would like answered in this column, please
contact Chris on 01332 365855
For further details, please contact:
Chris Jones, Director Corporate Finance
Email: chrisj@batesweston.co.uk
or telephone 01332 365855
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