Insights from our interactions this month 2022 has been a difficult year for business owners, we have come out of a global pandemic (or have we?), the war in Ukraine has hit energy and food supply chains and prices hard and then add to that the domestic political turmoil and the uncertainty that has created. Despite all that the general mood is surprisingly upbeat amongst all the business owners I meet and there are still buyers seeking businesses. So there is positivity out there, therefore owners looking to sell their businesses should continue to make preparations.
Tip of the month All businesses are facing strong inflationary pressures, which lead to rising costs, which in turn can drive down profit. Profit is one of the key drivers of value when selling your business, so if you want to sell keep a strong eye on profit levels and to look to at minimum maintain current levels or grow them if you can.
Some of the steps you can take to make your journey to selling your business smoother: – Plan well ahead, make sure your business is fit to sell * Is profitable with good cash-flow * Demonstrates growth and has a good level of recurring sales * Has a strong management structure and workforce * All contracts and legal paperwork are up to date * All accounts and documentation are up to date – Ensure all shareholders are in agreement that they want to sell – Choose good advisors (commercial lawyer, accountant, and broker)and ensure your focus remains on the business – Make sure you have a strong personal support network around you to help you de-stress and maintain your sense of humour. Featured Business this month WHOLESALER IN THE WATER TREATMENT SECTOR for sale Supplier of parts and components to the water treatment industry; both installers and dealers. Long established the company has built up an excellent reputation and operates from its own premises but is relocatable. Its product range is both bespoke and industry standard. The company has a turnover of £1.5m and generates an EBITDA of £478k. To maintain confidentiality we never disclose business names until applicants have signed a non-disclosure agreement.
I am lucky enough to work with #businessowners across a number of sectors, they are all amazing #entrepeneurs. I do find I get an extra buzz when I work with #manufacturers . There is something about companies making real products that really suggests added value. I recently posted about a distillery I am working with, I am now working with a #windowmanufacturer making products here in England with raw materials sourced in the UK too.
If you want to buy a manufacturer based in this country or want sell one why not contact me and start the ball rolling.
It can be stressful selling your business; letting go and ceding control to a new owner can be an emotional experience. During the sale process, things can be intense with you and your team having to answer difficult questions and provide lots of information.
On more than one occasion in the last few weeks, I have had to take the heat out of the situation to ensure a smooth handover. So, how do you prepare, firstly accept that it could well be emotional selling your business and try not to take things buyers and their representatives personally; they are just doing their job, and buying your business could represent a significant risk for them and the pressure to make the right acquisition could be very stressful to them.
Recently I started keeping bees and having bees buzzing around my face when I am inspecting the hive could be a bit daunting, but I wear a beekeeper’s suit and am very careful not to harm any bees, so what could be stressful, is actually very rewarding because I prepare appropriately. The same could be true for selling your business. I am just advocating that those who embark on the journey do so with their eyes open and prepare for your sale and a journey that may be a bit of an emotional rollercoaster.
Some of the steps you can take to make your journey to selling your business smoother: – Plan well ahead, make sure your business is fit to sell * Is profitable with good cashflow * Demonstrates growth and has a good level of recurring sales * Has a strong management structure and workforce * All contracts and legal paperwork are up to date * All accounts and documentation are up to date – Ensure all shareholders are in agreement that they want to sell – Choose good advisors (commercial lawyer, accountant, and broker)and ensure your focus remains on the business – Make sure you have a strong personal support network around you to help you de-stress and maintain your sense of humour.
On more than one occasion I have written about making a plan to get your business into a fit state to sell. Having a well-run growing cash generative company with a strong recurring revenue and management team in place puts owners in a good position to sell.
Not all owners have a plan in place for themselves once they have vacated the hot seat in their former business. Busy entrepreneurs tend not to be good at being idle for too long and no matter how appealing lying on a sun-kissed beach seems in the build-up to the sale, they soon get bored applying the suntan lotion. I have had clients who want to go and visit family members across the globe, others who want to tinker with classic cars, and others who want to start another business after they sell. I have also seen owners sell up and move to a dream location only to return after a couple of years and start again.
It pays to start preparing your personal path ahead of finding yourself drinking sundowners in a far-flung beach paradise twiddling your thumbs. It may be beneficial to start developing interests and activities that you can continue when you are no longer at the helm. For some the lure of improving their golf handicap may be the dream, for others, it could be taking on non-exec director roles and helping other entrepreneurs drive their performance. As a farmer’s son I have begun to nurture my garden (in a vain hope that I have inherited my father’s green fingers), most recently I have created a vegetable patch and apiary, it certainly gives me pleasure, whether it yields bountiful harvests is yet to be determined; I know it won’t keep me fully occupied once I eventually decide to hang up my coat, but I do believe it will be something I can draw continuity from, in what will be a period of transition in my life.
When the world around us feels grim, we have to start by wishing the people of the Ukraine our heartfelt support; then we could all do with some positive reinforcement, which was what I got in the form of a testimonial from a recent client.
Rupert was amazing; he fully supported us through out the entire process, whilst selling our business. He attended all the meetings with the potential buyers and provided invaluable advice to us, as novices in this area.
Needless to say the last 20 months have been tough on us all and the arrival of the Omicron variant is set to keep us guessing what the future holds. Many businesses are now finding ways to keep things moving and are trading at pre-pandemic levels and in some cases even better, thishas lead to positive movement in acquisitions market; only this week we have sealed the transfer of an alarm installer to a trade buyer. So, as we move towards 2022 it is prudent to consider whether now is the time sell your business. Questions to ask yourself: 1. Is your business demonstrating profitable growth? 2. Do you have demonstratable recurring income? 3. Have you got a strong management team in place? 4. Are you looking for a new challenge or lifestyle? If you want to discuss your answers to these and other relevant questions talk to an expert who can help you make a decision whether to sell or not. At Weybrook we are happy to have no obligation discussions and to give advice that can help you make a decision. To discuss the sale of your business contact Rupert Trevelyan email email@example.com call 07826 050690
As we start to unlock from lockdown, is it time for you to start thinking about selling your business? We have had really tough year with the Covid Pandemic, one thing it has reminded us is that life is for living and that we should savour every moment with friends and family. Entrepreneurs and business owners often are often working up to 7 days a week and they may well be considering lifestyle adjustments which could include selling their businesses. After the year we have had it may or may not be a good time to sell; at Weybrook we can work with you to put your business in the best position to sell; so why not give us a call to discuss whether now is the time to sell?
Listed below is some of the information buyers need from sellers:
Information Required When Selling Your Business Once you have decided to sell your business you will need to put together an information bank. The more preparation you do upfront, the smoother the selling process will be and you will be less likely to face hiccups and delays during the due diligence process.
Listed below is the key information that you should put together: Financial • Annual accounts (At least 5 years, this is essential information to have up front) • Up to date profit and loss account, balance sheet and cash flow forecasts o Details of the cost base and administrative costs • Details of any loans and outstanding debt • Forecast for next year and if available a 5-year plan • Details of assets owned (property, vehicles, machinery, stock, fixtures and fittings) • Stock at value• . Details of accounting infrastructure Sales • Sales figures; split by: Revenue and volume o By product / service type o Key customers o Forecasts for the next year and the remainder of this year o Sales o Contract details o Length of tenure • Details of key products and services provided Suppliers • Key suppliers o Turnover o Contract terms • IT and infrastructure People • Details of staff o Numbers of staff including directors o Management structure o Job roles and descriptions o Organisation chart o Names of staff (brief biography and tenure details) o Salary and benefits details o Contracts Legal • Details of company legal status • Shareholders details ( all shareholders need to be in agreement to sell) • Details of contracts and leases • Details of outstanding judgements or legal issues • Details of intellectual property rights and copyright • Registered brands and domain names Premises • Property details • Owned or rented. – leases and deeds• Tenure • Co-tenants / agreements Sales and Marketing • Website, social media & domain details ( webmaster, domain name, hosting details) • Sales and Marketing plan details & costs • Images and packaging details ( provide good images to help sell your company) • Data – what data do you hold and what is your GDPR plan?
This list is not exhaustive, but if you can provide the majority of this information you will be very well placed to sell your company. If you don’t have it up front, you will more than likely be asked for all or most of it by a prospective purchaser. Failing to provide it, could slow down, or even halt your sale!
I have seen deals where a company looks like a near-perfect match for buyers, but they fail in the due diligence process, which will concern all potential sellers. The solution is prepare and make sure your deal is not scuppered at the last moment. Some of the issues that have come up are: • Bank and intra company loans that need paying off • Payroll issues e.g. not accruing sufficient holiday pay for contract workers • Insufficient working capital / or disagreement about a fair level of working capital to be left in the business • Concern about the viability of some revenue streams leading to buyers demanding punitive warranties • Not having management information in place, leading to a large number of questions • Sellers taking questions as personal criticism when they are legitimate commercial considerations for a buyer to understand when purchasing a business. If you want to sell your business it is worth putting a plan in place which could be implemented over 1 to 5 years to put you in a position to get the best value when you sell. It should include: • A viable business plan that shows growth potential. • That your business generates enough profitable cash to satisfy the buyer (who may well by having to satisfy investor and lender criteria). • Management and staffing plans. • All documentation in place, including statutory and management financial information. When you are busy running a business this may seem daunting, it needn’t be; Weybrook Business Brokers can work with you to prepare for selling and then when you are ready market the business, find a buyer and negotiate the sale. Please contact us for an initial no-obligation conversation on Weybrook Business Brokers or call 07826 050690.
In the midst of lockdown 3, business owners may be reluctant to test the marketplace and consider selling their business. We are in contact with a number of investors with the capital to invest now, they are looking for cash generative businesses that have an assured customer base. Typically these are the criteria they are looking for in an acquisition:
• EBITDA: £0.5M – £5M
• Revenue: Predominantly recurring revenues
• Location: anywhere in the UK
• Sector: agnostic (but some are more specific)
• Asset Light & +15% EBITDA margins
• Particularly interested in situations where there might be a succession issue/retirement sale.
So if you would like to sell your business why not contact Rupert Trevelyan now for an initial no-obligation consultation. Email firstname.lastname@example.org Call 07826 050690
The approval of the Pfizer COVID vaccine offers us all a ray of hope and allows us to start planning for business life to return to some form of normality in 2021. The pandemic has had an impact on all businesses and for many, it is been detrimental, particularly for those in hospitality, leisure, travel and retail. Sadly some businesses have ceased trading and others have had to significantly reduce their operations. It is now time to take stock and plan for the future and for some owners that may involve selling their company.
We are regularly in contact with prospective buyers who have funds in place to make acquisitions now. In the current economic climate, they are looking for proven turnover and cashflow with sufficient profitability to cover their investment. If your business has those elements in place then you are well placed. In many cases, owners will be unsure if their business is ready to go market. At Weybrook we have worked with a number of owners to find solutions that suit all the shareholders and facilitate future growth.
One client, a digital marketing agency contacted us when they had an unsolicited offer from a competitor; we valued the business and evaluated the offer which turned out to be less attractive than it first appeared. Our work allowed the owners to find a solution whereby one director exited, an existing senior member of staff is acquiring that director’s shareholding and will become a director and an external investor is taking a stake in the company which will provide providing ongoing security.
In another case a family-owned garage business faced a crossroads when one shareholder passed away, we worked with the owners to find a solution where one of the two remaining shareholders exited and the other one acquired his stake.
We had two interested parties who had approached an IT services company, but their offers fell short of the shareholder’s expectations. Working with him we put together a three-year plan which is designed to increase the value and saleability of the company to a level that will meet his expectations.