Part One: Assessing Readiness and Appraisal
Welcome to Part One of a seven-part series by Altius Corporate Finance, providing a practical roadmap for business owners preparing for a successful sale. This article focuses on the critical first step: assessing your readiness to sell and conducting an accurate business appraisal. To jump forward to another section:
- Part One: Assessing Readiness and Appraisal
- Part Two: Being Due Diligence Ready
- Part Three: Preparation for a Transferable Business
- Part Four: Buyer Research and Profiling
- Part Five: A Professional Negotiation
- Part Six: Deal Structures and Payments
- Part Seven: Post-Deal Transition
Selling your business is a significant decision that is about much more than just financials. It begins with a clear understanding of your personal motivation and timing. Whether your goals involve retirement, reinvestment, or pursuing a new venture, clarity at this early stage lays the groundwork for a smoother process and stronger outcomes.
Why Are You Selling – and Is Now the Right Time?
Start by asking yourself some questions. Is this decision part of a long-term exit plan, or are external factors prompting a change? Are you pursuing a full exit or retaining some involvement? These considerations will influence everything from your business appraisal to the structure of the eventual deal.
Additionally, it’s essential to identify the type of sale you’re pursuing – will it be a share sale, where the entire company is transferred, or an asset sale, where only specific parts of the business are sold? The structure you choose will affect tax implications, buyer appeal, and negotiation strategy.
Understanding the Value of Your Business
An appraisal is a cornerstone of your exit strategy. Engage a broker who understands your sector and the nuances of your business. No two businesses are the same, and using the right adviser ensures the value put on your company reflects both tangible assets and the harder-to-measure intangibles that drive buyer interest.
At Altius Corporate Finance, we use a combination of market analysis, performance metrics, and EBITDA multiples to determine market value. This approach provides a transparent picture of what your business is worth, factoring in both operational performance and current market conditions.
Read more: What is the Value of Intangible Assets to Your Business Sale?
Conducting a Readiness Assessment
Beyond an appraisal, you need to assess whether your business is in the best condition to sell to achieve maximum value. This includes evaluating:
- Financial health: Collect at least three years of accurate, up-to-date financial statements. Prospective buyers will scrutinise your profit and loss accounts, balance sheets, and cash flow reports.
- Key performance indicators (KPIs): Highlight metrics such as gross margins, client retention rates, and year-on-year growth. Strong KPIs support a higher valuation and buyer confidence.
- Compliance and legal standing: Ensure there are no outstanding regulatory issues, expired licences, or unresolved disputes that could disrupt the process.
Preparation – Be Sale Ready
Early preparation allows you time to address any potential issues before the due diligence stage. Whether it’s operational inefficiencies, over-dependency on key clients, or outdated equipment, consider the issues that may impact your valuation and potentially slow down the transaction.
Sellers who approach the market with a well-run, compliant business are much more likely to proceed smoothly through due diligence and sale completion.
Next Step: Due Diligence
Assessing readiness and securing a comprehensive business appraisal is not only the first step in your business sale – it’s arguably the most important. With the right motivation, strategic timing, and expert guidance, you can position your business for maximum value and minimal friction.
In the next article, Part Two: Being Due Diligence Ready, we’ll cover how to prepare your financials, documentation, and operations for buyer scrutiny.
If you are looking to sell or buy a business today, contact Altius Corporate Finance to see how we can help with your next business steps.
