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Maximising the attractiveness of your firm ahead of sale

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Maximising the attractiveness of your firm ahead of sale
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There can be a temptation when preparing to sell a business to compare it with the sale of other assets.

Selling a house or a car? You make it look as clean and appealing as possible, and you will likely be guided by an independent expert’s view as to how much it is worth. So how hard can it be to sell a business, especially one you believe in?

But that is part of the challenge. Whether you started your business with the intention of selling it later or you have only recently decided on a sale, you have likely invested a lot of time, effort and emotion into it.

Your view of the business is probably quite different to anyone else’s.

There are several other reasons why selling a business is so much more complex than putting a house or a car on the market.

As well as the practical, legal, tax and logistical hurdles to surmount, there is also a good chance that it will have direct and potentially serious implications for other people’s futures and wellbeing.

That means you will want to feel very confident about getting a good deal.

In a market as competitive as the advice sector, potential acquirers may well have several options to choose from. Much, therefore, comes down to making your business as appealing as possible to those future admirers.

Preparing your business for a sale

It may be a cliche, but preparation really is the key to success. This covers everything from knowing what you want to achieve and what your red lines are, to having a vision as to what should happen after the sale. 

For adviser businesses, this includes meeting your professional duty to ensure clients continue to receive good quality service under the new owner, and that they do not suffer any adverse effects as a result of the sale. There is a similar obligation when it comes to staff that will remain within the business after the transition.

So, whatever your motivation for selling, it all starts with a plan. A plan would cover factors such as:

  • Your objectives in terms of both initial and deferred value.
  • Your red lines concerning clients and staff.
  • How the ongoing liabilities should be addressed.
  • Whether you want a share sale or an asset sale (and how to handle the associated tax implications).
  • Establishing consensus between shareholders/stakeholders/partners (as well as partner/spouse and any family members directly or indirectly impacted by a sale).
  • Consulting employees.

The full list is much longer. There may also be a substantial piece of work to be done to ensure all the necessary paperwork is up to date and in order. This would include accounts, business plans and strategy, distribution arrangements, client segmentation, client records, compliance documentation and governance processes.

Any acquiring business would likely examine the segmented list of the clients it is taking on board to better understand the quality and stability of client relationships and to check the company is not too dependent on a particular demographic or a handful of big clients. 

The sheer volume of preparation that might be needed could be a deterrent. But the planning process would ideally begin at least a couple of years before the sale. This gives the business time to fully consider and consult on its objectives, putting it in a better position to make good decisions when potential acquirers appear on the scene.