03: Preparing a business for sale

The ideal time to start to prepare a business for sale is when it is originally set up, because decisions taken at the outset can ultimately determine its attractiveness to potential buyers. The legal structure that you choose for your company will, for example, influence how potential buyers perceive it, as will restrictive articles of association or complicated capital and ownership structures.

Experts also stress that the length of time that it can take to find a buyer is commonly underestimated, and some recommend allowing several years. Deals provisionally discussed at golf clubs commonly fail because deep down there is no advantage to either party.

Before potential buyers are identified and the company is marketed to them, it is essential that you have a strategy to get the business into shape. Typical pre-sale activities include reducing overheads and levels of debt and stock, and preparing detailed financial information, including audited accounts and forecasts, which buyers will want to see before making an offer.

You should consider what specialist advice - from your accountant or other advisers - you need in order to reach a realistic valuation, negotiate a sale, complete due diligence and finalise the deal.