If you want to achieve the best sale price for your business, preparation needs to be done well in advance of taking it to market.
Let’s face it, you’re aware of all the hard work you have invested in the business over the years to get it to where it is now. However, if your financials aren’t showing the best results possible then the value you can achieve when it comes time to sell could be significantly affected.
Your businesses financial statements are a key part of the due diligence process a prospective purchaser will use to determine a fair purchase price.
Below are 10 tips to ensure your financials are strong:
- Turnover is improving year on year
- Cost of sales is in line with turnover movements
- Gross profit margin is consistent or improving year on year and within your industry benchmarks
- Overhead costs are as efficient as possible with no extraordinary items
- Salary and wage costs are in line with industry benchmarks
- Net asset position is healthy and improving year on year
- Surplus working capital exists
- Debtor recovery is strong
- Obsolete stock is written off regularly so no large write downs close to sale
- Recent valuations of your plant and equipment exist
Some other factors influencing the eventual sale price of your business include:
- Ensuring your business processes are clearly documented
- Technology, software and fixed assets are current and in good working order
- Budget to actual performance is documented and actively managed
- A well-documented business plan is in place.
Concentrating on improving your financial statements is the first step when thinking about selling your business. Reviewing all other components of the operations is also necessary. Performing a valuation of the business now with your Accru advisor can help to pinpoint areas that require work. It also allows you time to put the necessary steps in place in order to improve the value when sale time comes.
For many, selling a business is a one-time opportunity to reap the benefits of the blood, sweat and tears you have put in over the years. With a bit of advance preparation, your financials can present the best possible position and help to achieve the sale price you deserve.
Your local Accru office can assist you with this process get in touch today.
