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If running a business involves both planning and marketing, selling one does too.
Proper planning can help you attract buyers, so it’s important not to rush the decision. To make your business as appealing as possible, you might want to:
Spending time on planning should help you get to grips with your business’s proposition for potential buyers. What makes it appealing? It could be:
You can incorporate those into a proposal for buyers, focusing on your business’s USPs and your reasons for selling.
It’s important to be clear about why you're selling – potential buyers will want to know.
Whether it’s time for a new challenge or you’re struggling to find new customers, your ‘why’ helps you shape your goals.
For example, how much money do you need to do what you want to do next?
A deal can take six to nine months. Factoring in your preparations, the process may take more than a year.
Timing the sale is important, because you’ll want your business to be in the best possible position. If you need to make improvements, then account for them in your timeline.
Business brokers offer specialist services when it comes to buying and selling businesses.
You may not need to use one if you’re selling to a family member or someone else you trust. But brokers might make sense in some situations – for example if you want to negotiate the best price, or you don’t have enough time to do everything yourself.
On the other hand, selling yourself avoids broker fees. It all depends on your needs.
Selling means that you need to know how much your business is worth. There are different methods you can use to value a business.
It’s possible to reach a figure yourself, but professionals can also give you an independent valuation.
A valuation before you start the process can help you understand whether your business is in a good enough position for you to reach your goals. If it’s not, then you can focus on improving.
As mentioned earlier, you can approach this step as if you’re marketing your business:
Create a sale brochure – whereas a business plan helps you attract funding when starting up, a sale brochure should appeal to buyers. Detail your business’s USPs, growth potential, customer base, and other positives.
Approach buyers – do you have any potential buyers in your network, like clients, customers, or suppliers? You could also try to find potential buyers on social media. Otherwise a business broker can take control for you, as mentioned above.
Choose a few prospective buyers – sometimes, deals don’t work out. It’s useful to have another buyer you’d like to work with when that happens.
Negotiate – buyers will want to negotiate the sale price, so make sure you’re prepared. Your set price should leave room for movement, but have a minimum price in mind. If negotiations get difficult, focus on your business’s positives – how does its USPs and customer base match your buyer’s goals? Check your potential buyer has the financials sorted too, otherwise the process will take longer.
Keep everything in writing – from your initial approach to negotiations, a record of agreements made can help resolve any disputes that arise. If you make a phone call, then follow up with an email to make sure everyone is on the same page.
Due diligence – when someone agrees to buy your business, they’ll want to make sure that the deal checks out. If you’ve prepared, this shouldn’t be a problem, but working with a professional can help you spot (and plug) and gaps. The buyer will be looking at things like your intellectual property, contracts, financial documents, and business insurance.
Because of the legal complexity involved with selling a business, you may want to pay for professional legal services.
A solicitor can look at the agreements and make sure there are no errors. Documents include:
Once a deal’s agreed, there are different final steps depending on your legal structure. They usually involve telling your staff, notifying HMRC, and organising your taxes.
As you might expect, limited companies have more responsibilities than sole traders.
In terms of taxes, you can use an online form (accessed by using Government Gateway) to tell HMRC that you’ve sold your business. This essentially de-registers you for Self Assessment and National Insurance responsibilities.
That being said, you need to send a final tax return by the 31 January deadline and include the date you stopped trading.
If applicable, you may be able to transfer your VAT registration number to the new owner.
Finally, you may have made a capital gain from the sale, whether it’s cash for selling the business or assets that you keep. You should check whether you owe any capital gains tax and whether you’re entitled to any reliefs.
Firstly, check your business partnership agreement, as there may be restrictions and conditions on selling.
The steps are broadly the same as sole traders, but the tax return you need to send depends on whether you’re selling the whole business or just your share of the partnership.
If you’re selling your share, then you need to send a personal Self Assessment by the deadline.
If you’re selling the whole partnership, the nominated partner needs to send a partnership tax return by the deadline (and you still need to send a personal one, too).
The steps depend on whether you’re selling your shareholding (for example, you’re the sole owner), or a limited company is selling part of its business.
When selling your shareholding, you need to:
When selling part of a limited company, you need to:
Is there anything else you’d like to know about selling a business? Let us know in the comments below.
Sam has more than 10 years of experience in writing for financial services. He specialises in illuminating complicated topics, from IR35 to ISAs, and identifying emerging trends that audiences want to know about. Sam spent five years at Simply Business, where he was Senior Copywriter.
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