If you’re a small business owner considering retirement or a new chapter, you may be asking yourself whether your business is ‘ready’ to be sold? This simple question can invoke a lot of complex considerations, such as how to protect your legacy, how to ensure you realise true value for the success you’ve built over many years, and how to ensure a smooth handover to someone new – often someone you don’t know yet.
Genshare supports the transition between founders and incoming leaders, but there are definitely measures that can be taken ahead of time to ensure your business is ‘ready’ for a seamless and successful acquisition. The more prepared you are, the more likely Genshare will be to consider it for acquisition. Below, we outline some key steps we encourage sellers to consider ahead of pursuing the sale process.
1. Understand your business’s value
You need to understand what drives the value of your business. Often, business owners think that revenues translate directly to readiness, but buyers are actually looking for detail beyond your revenue figures. Things like financial resilience, recurring revenue, and the ability to scale systems are likely to be considered by buyers. You could also seek a formal valuation? This can give you a sense as to whether your expectations are aligned to what’s realistically possible.
2. Organise financial and legal gocumentation
Unsurprisingly, buyers prefer clean and organised accounting systems. If your accounts blend personal and business expenses, or if your financial reports are patchy, buyers are less likely to consider your business because it makes the due diligence process increasingly difficult. Likewise, contracts, leases, and IP should be clearly documented and accounted for.
3. Streamline Operations and Document Processes
Business complexity can be a red flag for buyers. If your services are bespoke, or if delivery hinges on your personal expertise or involvement, that’s a risk buyers will identify. The better you can demonstrate that your business provides scalable, repeatable services (even in your absence), and the more you can document processes and systems, the more attractive your business will be to a buyer.
4. Address loose ends
Before you go to market, tie up any potential loose ends. This may include renegotiating unfavourable contracts, addressing business debt, and resolving staffing gaps. Also look at yourself: are you still the key point of contact for clients? If so, start handing over relationships. A gradual transition from you to other staff helps reduce reliance on you and in turn can boost buyer confidence.
5. Engage professionals
Credible accountants, brokers, or legal advisors can help you avoid common traps, negotiate better terms, and ensure your business is positioned as a premium option for serious buyers. They can also guide you through things like valuation methods, tax planning, and how to structure the deal so you walk away with a fair sale price.
6. Can the business go on without you?
Buyers want to be confident that the business can continue to run successfully even when you’re gone. This means you need to be honest with yourself about how much the business depends on you, and how easily you can begin to delegate your various responsibilities. If you haven’t already, you should start sharing institutional knowledge with key team members, and start formalising the transition of business-critical activity to appropriate leaders within the business.
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Getting your business ready for acquisition shouldn’t be a last minute scramble. From tightening your finances to documenting your processes and empowering your team, the steps you take now will pay certainly pay off later.
You can learn more about Genshare’s business acquisition process here.
