Getting ready to exit your business? Here’s what you need to know

Nov 2, 2020 | Business, Planning, Small businesses

If you are thinking of exiting your business, either now or in the future, you will need a well planned strategy. Selling a business is not as simple as it might seem at first.   And unless you have sold or acquired a business before there may be many issues that you might not have thought about.

So, to get the best possible outcome, you need to prepare an effective and financially beneficial business exit strategy.  This article will outline the things you need to take into account when planning the sale of your business. 

Important things to keep in mind

Before we get into specific actions you should take to make the sale of your business as smooth as possible, there are a few important things to consider before you decide to exit your business: 

Reasons for selling

The reason for selling your business will be a lot more important to a prospective buyer than you might think.  They will want to know if you are selling because you’re planning to retire, because of illness, or maybe just interested in a different line of work.  

However, selling in these circumstances is completely different to selling because your business is not profitable enough or you don’t think there’s opportunities for growth. If this is the case then it could make your business a lot more difficult to sell.  And if the business is losing money and you have little choice it could be very difficult to find a buyer.

The time of the sale

Although possible, it’s very rare that a business is sold within a month of being offered for sale.  It’s likely to take much longer than expected to negotiate a sale and there is always the possibility of a buyer backing out at the last minute, maybe because they couldn’t raise finance or perhaps saw another opportunity.

You might also struggle to find interested buyers in these unstable economic times.  So, you need to be realistic about how long it will take to sell your business and start preparing early – preferably a year or more in advance so that there is no rush and you can plan a smooth transition for the new owners. 

You’ll need help of a professional

Trying to sell your business on your own without any help or advice is not advisable, unless you have prior experience.  And even then, you’ll probably need a solicitor to deal with a sale contract.

You will need help dealing with your finances, from figuring out the tax implications of your business sale, valuing your business, increasing the attractiveness and value of your business, to planning your sales strategy.. 

You might also decide to engage a business broker or a merger and acquisition specialist.  Engaging the right professionals will make everything a lot easier, quicker and smoother as well as ensure you get the best deal possible, so allow a budget for professional fees.

Important steps to take

Now that we have the basic considerations covered, we can get into the main steps you will have to take when trying to sell your business. 

Organise your paperwork

Your business accounts and documents will be the first thing potential buyers will want to look at to understand your business’s financial health, the internal operations and the true value. 

This stage could be make or break for your sale, so you need to ensure your accounts are fully up to date and documents are well organised and accurate, representing a well-managed company.    Not only do tidy finances make your business more attractive, but it is also a good way to maximise your value in terms of the sales price.

A typical buyer will ask for the last three year’s accounts and documentation.  Some may want as much as five years.  The information will also be scrutinised by a lot of professionals during this process, such as solicitors, accountants, brokers, business valuation specialists and so on.

The documents you will have to present include: 

  • P&L (Profit and Loss) statements
  • Balance Sheet
  • Tax Returns
  • Bank Statements
  • Customer Data
  • Leases
  • Supplier and Vendor Contracts
  • Employee contracts and payroll information
  • Stock
  • Assets
  • Loan agreements and debentures
  • Shareholder details

If you’re not yet using accounting software, it may be appropriate to get one now.  Efficient accounting software will make preparation of your accounts easier, better organised and fully ready for the sale. 

Rather than take this on yourself, engage an accountant to set everything up and provide clear reports that will help buyers understand your business. 

Valuing your business

Putting a price tag on your business is not just a number you can come up with out of thin air. The method of valuation will depend on a number of factors and will be influenced by the business sector and whether your business has assets such as property or land.  

Valuation will also be determined by the overall financial health of your business, current market demand, industry trends and many other variables. With everything taken into account, your price needs to be just perfect – not too high yet as high as it can go. 

You will need a professional to help you value your business objectively and with detailed explanations, so you have a good understanding of how high or low your price can be negotiated. This would be difficult to do on your own, as you may have certain biases towards your own business. 

Adding value to your company

You may wish to consider steps you can take in preparing for sale that will add value to your business or make it more attractive and potentially speed up the sale.. 

Let’s have a look at a few things you can do to increase your company’s value: 

  • Growth plans for the future – Even though you’ll not be involved in the plans, you should have them prepared.

    Showing what could be done to ensure continued growth will make your business a lot more attractive. Of course, share these plans with discretion, as you don’t just want to give away valuable strategic ideas for free, but this will help interested buyers see that there is room for growth after the deal and there are plans already set for the future. 

  • Have a business manual – This will help your business sell quicker – essentially, it will ensure a smooth and easy transition for the new owners, so they can just pick up where you left and start working.  Your business manual will explain all the business processes and operations in one place.

    You should also have a document with access information for software, resources, social media pages and so on. Make sure it is stored securely though, as losing this sensitive information could pose a risk to your business..

  • Improve your business financial health – Of course, it’s easier said than done. However, it may be worth seeing what exactly you can do to improve the financial health of your business.

    You should ask an accountant to perform some deep health checks and advise you on what can be improved.   Perhaps there is scope to improve profitability by making a few fundamental changes, such as cutting down on unnecessary expenses or getting rid of products that don’t bring profit. 

  • Invest in adding value – This might feel like you are paying money into something that will soon not be yours and so there is no point.  That’s not exactly true though if you add value wisely.  Potential buyers will pay more for a business that requires less investment post-acquisition.  Look at whether adding value will gain more than the amount you invest.
Finding a buyer

Finding the right buyer can take many months and will need patience.  To plan the right marketing strategy, start by asking yourself some important questions, such as who is my potential buyer, where can I reach them and what do I expect from the deal.

It may be appropriate to engage a business sales specialist, or you might choose to advertise independently.  If you do, then don’t hold back on advertising your business – you want to expose it to as many people as possible. At the same time, you don’t want to waste money promoting the wrong people, so make sure you advertise in the right place.

Once you have potential buyers, it’s essential to keep the process moving forward: 

  • Stay in contact with your prospective buyers, don’t just wait for them to keep reaching out.
  • Ensure that your potential buyers pre-qualify for financing early on and before you give them too much information about your business.
  • Allow room for the price negotiations, but also stand firm on a reasonable figure that considers your business worth and growth potential.
  • Always put any agreements in writing. Protect your business information by asking prospective buyers to sign confidentiality / nondisclosure agreements.
  • Consult an accountant or lawyer before signing any agreements. 


Have a post-sale strategy

Having a life plan after exiting your business is just as important as the selling strategy itself. You should create financial goals for your future and decide what you will do with the money – invest it, save it for retirement, use it for paying off debt, etc.

There may be tax implications so it might be necessary to take advice from an accountant or financial advisor to consider how the sale should be structured.

Planning ahead in a good time will help you achieve the outcome you want.

Final word

Exiting your business could be a complex process and may require a lot of patience, time and even money invested in your business.  Or it could be really quick and easy if it’s a relatively small business.

But, it’s important that you are fully prepared and know exactly what to expect.  Even if you’re selling a small business, it’s best to get help from professionals to make the sale as smooth and fast as possible. 

Need help with your business exit strategy?

If you’re looking to sell your company and you need an accountant to help with the process – we should be talking! 

We’ll help with the financial planning, personal taxation planning and our Mergers & Acquisitions Specialist can assist with larger deals. 

Call our friendly team on 01202 755600 or drop an email to for a further discussion