Want to sell your business? In this guide we take you through a step-by-step process of how to sell your business. Each and every step is equally important, and we will successfully guide you through them all.
Fx Dynamics is a specialist business broker assisting business owners sell their shareholdings. Our sellers are typically in the range of £2m – £20m turnover. We cater for less than £2m through our Small Business Division. Our experts use their experience to maximise your company value, find a buyer and negotiate the sale to completion.
The 7-Step Guide to Selling Your Business
Step 1: Free Initial Consultation
The first stage to sell your business is arranging a free consultation with us. After this, you will decide to act, or not. Acting involves engaging us as your business broker to represent your interests and to find the right prospective buyers for your business. You will dictate what’s important to you. Continuity of the business you’ve built? The welfare of loyal staff post sale? Retirement and a new life? It is rarely a straight-forward decision, but we will construct the parameters and documentation and advise what is likely to be possible, or otherwise.
Step 2: Business Broker Engagement
The Engagement stage is where the documentation is signed and we are formally engaged as your business broker. We both then agree to move forwards to the detailed preparation stage of selling your business.
Step 3: Preparing Your Business for Sale
The Preparation stage is perhaps the most important. It is where we discreetly delve deep into information about your business and extract all the key points. These are going to backup our valuation expectations. Once we feel we have all the information we need, we then prepare the documentation needed to sell your business. We write the business summary (Teaser) and the full Information Memorandum (IM), in readiness for delivery to prospective buyers.
The most important piece of information a potential buyer will use when determining an acquisition’s feasibility is the documentation. Therefore, we think it must be extraordinary. We don’t simply enter numbers and images into a pre-made template like everyone else does. We take pride in presenting a stylish suite of first-class information which is attractive to a buyer. This also needs to stand up to extreme buyer scrutiny.
Step 4: Marketing
Whilst the documentation is being prepared, we work behind the scenes to establish a profile of potential buyers. Finding the right buyer is important, so using our global database of contacts, we call upon all of our collective knowledge and experience to generate two target lists. The first list will be between 5 – 10 prospective buyers which we believe are most likely to be interested. The second list will be all of the potential buyers we have found in excess of list one. These will be contacted should the first list prove unsuccessful.
Step 5: Acceptance
The acceptance stage is reached once offers have been received and we are happy that the negotiations have achieved the desired outcome. We then move to the preparation of detailed heads of terms and sale agreement documentation. We believe it is worth investing time into preparing and negotiating heads of terms. These should be in as much detail as possible. This reduces the extra time taken and therefore legal fees during the final Share Purchase Agreement (SPA) completion process.
Step 6: Buyer Due Diligence
The buyer will want to perform Due Diligence (DD) before completing to verify information and claims, and identify any business risks. Whilst this sounds daunting, we have a huge amount of experience with Due Diligence. We prefer to go through Due Diligence checklists then prepare a fully loaded online data room in advance of the buyer’s requests for information. That way we present a professional, high integrity proposition. This takes the frontline stress away from you.
Step 7: Completion
Right up until the sale is completed, we stand side by side with business owners. We advise, assist and liaise with legal teams, vendors and purchasers. This ensures a timely, stress-free and efficient company sale.
Now you know how to sell your business, want to find out how Fx Dynamics can help? Contact us now for a free consultation.
How to Sell a Business FAQs
A good business broker will extract and document hidden value in your business and calculate its maximum valuation before approaching its own extensive network of acquirers. Offers received will be negotiated and very often a company like Fx Dynamics will reach a higher deal value than you could if you were acting independently. It also allows you to get on with running your business as it is imperative that day to day operations are not affected by what can usually be an extensive, information demanding deal process.
In most sectors, there is a earnings multiple specific to that business sector. There are factors that may affect whether the multiple achieved is nearer the top end of the range or falls to the lower end of the range.
At Fx Dynamics Ltd, we are acutely aware of the sensitive nature of selling a company, and will at all times ensure the highest level of confidentiality. We are meticulous in hiding any details from our ‘teaser’ that may identify you.
With our experience we like to advise the seller to be involved with the purchaser for several months post sale, depending on the circumstances. This is ultimately up to you though.
This depends on the size of the business and the circumstances affecting each participant. We do however aim to have your business sold within 6-9 months from you signing our engagement letter. However, circumstances may dictate that it takes a while longer, but we will always keep you up to date with the progress and developments of the sale regardless.
Simply put, there is no best time to sell a business. However, it is most convenient to avoid the summer months due to holidays, particularly when looking at cross border deals.
We use a variety of online and offline methods to market businesses, as well as interrogating our own database of global prospective buyers. We have an extensive list of qualified buyers in all sectors.
This is one of the reasons you would use Fx Dynamics Ltd. It is much easier to negotiate for somebody who is at “arm’s length” and emotionally detached.
If we do not achieve a sale we don’t earn our commission so it is in our interest only to introduce potential buyers who appear to be a good match and can be reasonably expected to complete the deal. At Fx, we believe in thoroughly vetting all prospective buyers at the outset even to the point of obtaining proof of funds.
Our best advice is always to display the skeletons in your cupboard rather than let them be found. Any prospective buyer will do a thorough Due Diligence and will more likely than not spot the problems. If you are up front about the problems, it allows buyers to take a view of the situation. We may also be able to advise you on how to resolve the issues before selling your business.
A warranty is your express declaration about certain matters. For example you may be asked to give a warranty that there are no claims pending. An indemnity states that if certain events arise you will make good any loss suffered by the buyer usually on a pound for pound basis. This is an area of particular expertise within Fx Dynamics.
This depends on the type of deal done and the level of working capital required in the business. Very often you would extract the cash from the business provided the working capital requirements have been satisfied.
There are pros and cons to being a specialist in your field. It may limit the number of potential buyers and can often take much longer to sell but on the other hand it could make your business very attractive for a buyer.