23rd August 2018
No matter whether you are sole trader or the owner of a small or family enterprise, your business can be incredibly personal to you. You may have started the business from scratch, nurturing and guiding its growth and surmounting the challenges which inevitably face businesses from time to time. On the other hand, you may have inherited a family business; receiving the baton from preceding generations and working hard towards delivering continuing success.
Whilst that line of succession may well continue, for some business owners a time may come when they contemplate selling the business. Perhaps the marketplace has moved and in order to continue meeting customer needs you need to offer economies of scale or alternative products; something which is best delivered through a sale to, or merger with, another organisation. Perhaps you have taken the business as far as you can and require outside expertise to take it to the next level. Or perhaps the succeeding generation isn’t interested in taking on the challenge. Whatever the reason, deciding to sell your business can be a fairly emotional time. It is, however, important not to let the effect on the heart over-rule the head if you are to optimise the outcome.
So what are the top tips for successfully selling your business? It may sound obvious but top of the tip list would be to plan ahead and take professional advice. For example selling a business may give rise to a capital gains tax charge; something which could be mitigated by entrepreneurs relief, but only if the qualifying conditions are met. So whilst the heart may say sell now, the head (properly advised) may understand that effective tax mitigation plans require a delay of a year or more.
Similarly, sitting down with your accountant or other business sales professional may help you to understand the true worth of your business. Valuing a business can be extremely complex, particularly as the method used varies according to the industry and business type. Understanding your options including whether you should simply sell the assets or look to dispose of the business as a going concern can make a material difference to the eventual outcome.
Then there are other areas of consideration such as what responsibility/liability you may have in respect of employees or whether existing supplier/client contracts may include penalty clauses.
Thompson Jenner’s Exmouth Partner Simon Lewis commented: “No one knows your business better than you do. But when it comes to structuring and negotiating a successful sale, receiving timely professional advice could help you to structure a successful sale and avoid any potential tax pitfalls.”
Selling your business will rarely be a straightforward process, so getting expert advice and support to help with your planning will strengthen your path to a sale.
If you would like to find out more or meet to discuss the services which we are able to provide, please contact Simon Lewis or one of our other Partners on 01392 258553 or 01395 279521 to arrange a free initial meeting.
