Helpful Tips for Selling a Business
Selling all or part of your business is a major decision. There can be many reasons for selling. Restructuring, financial difficulties, dreams of changing careers, no natural successor for the family business—or something else entirely. Regardless of the reason, there’s a lot to keep track of before the sale (taxes, legal matters, finances…) to ensure you get the full value of your business.
5 things to keep in mind:
Be prepared and get out there early
A business sale takes longer than many people think, and preparatory steps can have a significant impact on the final valuation.
Think about which advisor to choose
The advisor’s experience from previous sales processes, expertise in business valuation, and ability to see things from both the seller’s and the buyer’s perspectives—all of these factors influence your ability to realize the company’s potential value in a sale.
Think about what kind of buyer would be a good fit...
... both with regard to the company's future and the owners' potential preferences.
Consider whether you, as the owner, want to remain involved in day-to-day operations...
... and whether you might want to remain a partner in the company going forward.
Find out what tax rules apply...
... and how to optimize your taxes in connection with the sale of your business (a good advisor can help you with this).
Preparation is key
It is not uncommon for owners of privately held companies to be approached by potential buyers—either major industry players or financial firms. But is the offer the buyers are making a good one or a bad one? Should you negotiate with a single buyer or invite more to participate in a bidding process?
Obtaining an accurate valuation of your business is a complex process, and there are many factors to consider. It is therefore helpful to seek the assistance of an external party who can provide an independent perspective on the valuation.
It’s possible to obtain preliminary valuation estimates fairly early on. These are based on the business’s operating income, cash flows, profit margins, and growth. But there are also preparatory steps you can take yourself to increase the value—for example , cutting unnecessary costs, optimizing working capital, reviewing agreements with suppliers and customers, possibly changing the revenue model, and so on. A good advisor can help you with this.
As you can see, there are many factors to consider (and many things you can do in advance) that will affect how successful the sale of your business will be. Getting up to speed on everything yourself takes time—all while you’re still running your business profitably.
Further down, you can read what OWL CEO Markus Ödbring has to say about why you should hire an advisor when selling your company.
When Worxsafe sold to Ramudden, they hired OWL
"The guidance we received allowed us to stay in control throughout the entire process."
How did you come into contact with OWL?
– Our accountant recommended OWL to us regarding a specific matter. We immediately sensed that the advisor was interested, humble, knowledgeable, and experienced, which inspired confidence. That’s why we decided to move forward with the collaboration.
What did you need help with?
– Financial advice and guidance regarding the sale of a company. This included, among other things, reviewing the letter of intent, the purchase price mechanism, and the purchase price calculation.
How did you find working with OWL, and how helpful was the advice you received?
– The collaboration was simple, straightforward, and instilled confidence, which gave us a sense of security. We felt that the advisor had solid knowledge and experience, and that we could consult with them at every stage of the sale. That made us feel like we were in control of the process.
“We take full responsibility for the sales process and ensure that you realize the full value of your business.”
– Buyers and sellers often speak completely different languages and see value in different things. Because we can also see things from the investors’ perspective and understand their agenda, we provide strong support throughout the entire process. Our role is to ensure that you, as the seller, realize the full value of your business and of what you’ve built. We’re also here to take the pressure off you during the process, so that your core business doesn’t lose momentum and, as a result, lose value.
There’s a lot to wrap your head around when selling a business: taxes, legal matters, finances… Markus believes it’s unreasonable to expect the owner of a small or medium-sized business to handle all of that on top of day-to-day operations.
– That’s where we, as advisors, come in. We take full responsibility for everything, from the preparatory work to drafting the sales agreement. We start by getting all the paperwork in order, reviewing ownership issues and the corporate structure, addressing tax matters, and so on. Together with you, the seller, we take it step by step to ensure you get the most out of your business.
Selling your business should feel right in your gut—every step of the way. That’s why Markus and his colleagues work closely with you, the business owner, throughout the entire process.
– The structure of a sales agreement involves much more than just numbers on a piece of paper. It’s also about how you view your own future. Do you want to continue working at the company or leave immediately? What might your future role look like, and how can you ensure that the job remains enjoyable even under a different ownership structure? We truly care and make sure that all questions and concerns are thoroughly addressed.
OWL decided early on that they would not charge any fees from the initial contact. The focus is on creating as much value as possible in the transaction and then basing the fee on how successful the deal turns out to be.
– Being an advisor is about building a relationship, earning trust, and helping to create value. Only when the deal has closed and all parties are satisfied have we done our job.