Selling Your Business
We've put together an FAQ to answer some of the most common questions about selling your company. This is divided in to 3 sections:
1. The stages of selling a company
2. How your business is valued (including indicative calculator)
3. Structure of payments
1. The stages of selling a company
Q: What are the typical stages of selling my business?
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The process generally follows these key steps: initial outreach and interest, confidentiality agreement (NDA) signed, evaluation and valuation, negotiations and heads of terms, due diligence, finalising terms, and completion (closing).
Q: How long does it usually take to sell a business?
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Selling a business can take anywhere from 2-6 months
Q: What happens after I express interest in selling?
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After you express interest, we’ll conduct a preliminary review of your business. This is followed by discussions to understand your goals and gather information for an initial valuation.
Q: What is due diligence, and when does it happen?
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Due diligence is the detailed investigation of your business, including finances, operations, and legal matters. It typically happens after both parties have agreed to the general terms of sale (heads of terms).
Q: How involved will I need to be during the sale process?
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You will need to provide information during the due diligence phase, attend meetings, and be available for key decisions. However, we’ll guide you through the process to make it as smooth as possible.
2. How your business is valued
Q: How is the value of my business determined?
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Business valuation is typically based on factors such as revenue, profit margins, market position, assets, and industry trends. Financial statements, cash flow, and future growth potential are key components.
Q: Can I value my business based on revenue alone?
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Revenue is an important metric but does not reflect the full picture. Profitability, industry conditions, customer base, and the business’s growth prospects are also crucial factors.
Q: How do external factors impact the value of my business?
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Industry trends, economic conditions, competition, and regulatory changes can all impact your business’s value, positively or negatively.
Q: Can I negotiate the valuation of my business?
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Yes, the valuation is a starting point for negotiations. Both parties typically discuss and agree on a final figure that reflects the business’s true worth.
3. How the deal is structured and other questions
Q: How is the payment for my business structured?
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Payment can be structured as a lump sum, installment payments, or as part of an earnout where additional payments are made based on future performance milestones.
Q: Will I need to stay involved in the business after selling?
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Depending on the agreement, some deals involve the seller staying on for a transitional period to ensure a smooth handover. This can be part of the negotiation.
Q: What are the tax implications of selling my business?
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Selling a business can have significant tax implications, especially concerning capital gains tax. It’s advisable to consult with a tax advisor before finalizing any deal to understand your obligations.
Q: How do you ensure confidentiality during the sale process?
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We sign a Non-Disclosure Agreement (NDA) with you at the beginning of the process to ensure that sensitive business information is protected throughout the negotiations.
Q: What costs will I need to pay when selling my company?
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At the point of a draft agreement (heads of terms) we recommend employing the services of a qualified legal professional. You may also wish to seek advice from your accountants or tax advisors. However, all other costs are usually paid by the buyer.