The top 5 things to prepare for when selling your business
10 February 2023 6167 Views
Atomic Consultancy, the specialist acquisition management business, believes that 2023 is likely to present significant opportunities for those looking to sell their agency business.
There are many buyers looking to acquire in the current market, and with demand keeping prices stable, sales are looking all the more attractive. Sellers might also be aware of the raft of legislation heading our way, along with tax changes that will affect business sales over the next 2 years, and might plan to exit ahead of time as a result. Challenges in recruitment and salary rises may also impact a business’s bottom line, making 2023 an ideal time to sell.
If you’re considering selling your business now or in the next few years, here are our 5 key preparations we’d urge you to consider in advance:
Understand the worth of your business
In principle, every business is valued by a buyer on profit rather than income turnover, however brokers in the estate agency and lettings industry also value businesses on turnover for the sake of accuracy – it is possible to derive very different profit figures from a business, so the turnover valuation is an important reference point when other factors can be variable. Different multipliers are placed on several elements of your business, making valuing a complex job, and those multipliers vary significantly based on the size and location of your business and the services you offer.
It’s important, therefore, to gain a full, accurate understanding of the value of your business before embarking on a journey to sell and having your business valued by a broker is a sensible first step.
Unlock additional profit in your business
There are several straightforward ways to do this:
Conduct rent reviews on stock and increase your management fees (excluding Scotland, where there is a rent freeze)
Introduce additional revenue streams such as rent guarantee
Add a small mark-up on contractor commissions
Review overall costs for running the business, in particular around direct debits
Conduct your own due diligence
Taking the time to understand risks that could make a buyer delay or walk away from a sale will result in a quicker end-to-end process and reduced liability. Are your management accounts clean and easy to read? Do you have an up-to-date set of accounts? What does your balance sheet look like? Are your taxes up to date?
If you want to understand the full array of due diligence that can maximise a sale price, Atomic Consultancy are here to support you through the sales process.
Conduct a health check on your business
There is much to consider before putting your business up for sale:
Landlord Terms of Business - how many are signed? How long is the termination period? Is there a right to assign clause? Is there a clause where you can get commission for additional revenue streams?
Are your accounts in order? Do they reconcile? Are your deposits in order?
Do you display all the correct requirements on your website?
What hire purchases or lease agreements do you have in place, and how long is left on them?
How secure is your data? Do you get the best out of your CRM system? Do you have a lot of paper files?
These are just a few of the questions a seller might ask and you need to be ready with the answers in order to give a buyer the confidence to make the best offer.
Get the best key advisors in place
Sellers need to bring a good accountant on board who understands tax implications on the sales of business. Over 25% of deals fall through due to the lack of a good corporate solicitor whose understanding stretches beyond acquisitions into lettings and estate agency transactions. Without the right advisors in place, deals will cost more and take longer to go through.
At Atomic Consultancy, we have an enviable network of contacts and can support you through the entire sales process, including the due diligence and legal aspects of the deal.
Need help with the sales process?
Sales and acquisitions are complicated, but don’t worry – Atomic Consultancy are here to help. We have completed on over 250 acquisitions in 8 years, with an accumulated value of £110,000,000. We offer guidance, project management, and integration support, preparing businesses for sale to maximise their price while managing the sale itself. If you’re considering selling and want to discuss your options, get in touch today.
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