- Management – ensure that the team are credible, enthusiastic and bright. Are there areas of weakness? Can this be resolved before a sale?
- Structure – acquirers don’t like complex structures. If you have a raft of subsidiaries and off-shore entities, you may have created a means of minimising your tax but you just may have made your business unsellable. Clean sales are always easiest.
- Legal – ensure that there are no disputes outstanding. All companies will have disputes of sort. Just ensure that they are resolved before you enter due diligence.
- Audit – whether you need it or not have your accounts audited. Audit creates an implied level of trust in your accounting procedures and therefore the accuracy of your year-end accounts which can be invaluable.
- Accounting policies – ensure that you know what your policies are; and that they are sensible.
- Business plan – ensure that the business plan is believable, simple and error free. An up to date business plan showing the direction the company is going is a key part of demonstrating the value in the potential of the business.
- Tax – do not be aggressive with regards tax planning in the few years leading up to exit. Also ensuring a good compliance record, particularly in relation to VAT. This also minimises your chance of a tax enquiry.
- Intellectual Property – ensure that your intellectual property is defined, registered and ensure no disputes exist surrounding it.
- Book-keeping and administration – ensure that the processes that exist are efficient.
- Focus – ensure you remain focused on what you do best.
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Many small business owners and Entrepreneur’s looks to build a business which they hope to sell, either in the short or longer term. Having an exit strategy is an important area which is often overlooked. Maximising the chance of a sale and achieving the highest possible sale price requires a plan long in advance of the sale date. In fact, such steps are often taken a year or more in advance of any potential sale, since the issues can take time to resolve. Wisteria has advised and supported many companies through a trade sale. As a result, our experience has helped us to build a to-do list for companies for an exit. For those that have succeeded the following 10 points were all considered in the year or two ahead of sale:
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