If you are looking to sell your practice, the key is to make sure you give yourself enough time to consider various options. The process of selling is usually not a quick one, and it often takes a year to facilitate a transaction so it is worth preparing for that.
However, sometimes you might get an offer or a particular event might come up which means you need to sell quickly – and it will pay to be prepared.
Under both scenarios, you should have an adequate succession plan in place that outlines how you’re expecting to sell, have processes in place and things in shape as much as possible. Generally, businesses that are ideal for sale are usually running pretty efficiently and profitably, so the transaction will be quicker and the owner will benefit from a higher profit margin.
It’s all about making sure the transaction is as easy as possible for the end buyer. As a seller, if you can take as much risk off the table for the buyer as possible, this will provide a buyer with more comfort that why they’re buying is good, and they will likely pay a higher price.
What this means in practice is having good quality information available, whether that be on your client base, detail on active versus passive clients or how much your top 20 clients represent as part of your business. Good management reporting will also help you highlight the financials of the business in a reasonable timeframe.
Key information on clients and financials will help you communicate to a potential buyer what a good opportunity your business is, and this is what any serious buyer would expect to cover off during due diligence.
With small businesses, sometimes they don’t do accounts quickly enough after the end of the financial year. If you ask them for accounts mid-way through the year it can be a challenge for some businesses that don’t have access to that information.
If you have a potential buyer in mind and you are actively looking to sell your business, then the information you provide, usually in the form of an Information Memorandum, should really highlight the key benefits of your business from a buyer’s perspective. Like anything, if you get advice with this process you should get a better outcome.
So the key points in preparing your business for sale are: prepare early; know your likely buyer; and provide the right information.
