How to sell a business for its maximum value

Posted by on Oct 22nd, 2010  |  Last modified on Apr 12th, 2013

Last updated on April 12th, 2013 at 09:12 am

I recently hosted a leading international business sales agency to talk about how they sell private companies and maximise their sale price.

 

The following were among the insightful and useful points that were discussed:

 

  • Avoid passivity: You need to be proactive in identifying the most suitable and appropriate potential acquirers.  You or your agent should maintain a large database of potential buyers and employ a research team to identify the best prospects.  The most suitable acquirers are rarely considering an acquisition, hence why you need to take the opportunity to them.

 

  • Purchaser motives: The value of a business is rarely related to traditional return on investment (ROI) measures.  Motives of purchase very widely, although there are two motives which have the greatest positive impact on achieving a maximised sale price. These are the quality, stability and longevity of a company’s client base and a company’s potential for growth.  Other motives include access to a company’s market, access to key technologies, acquisition of a skilled workforce and entry into the UK market by an overseas company.

 

  • Bidder competition: This factor exhibits a greater degree of influence over the sale price than any other.  However, not only must there be a choice but the competing organisations must be strategically motivated and financially capable of making competitive bids.  Bidder competition can also speed up the time taken to sell the company and improve the general terms of the deal.

 

  • Selling the future:  A company’s history has little or no value to a potential acquirer; it is the future that contains value.  Purchasers will not necessarily be looking at a company’s history, but will be analysing how the business will be performing in the future once the acquirer has applied their own finances, sales skills, customer base and other resources.

About Jonathan Lea

Jonathan is a specialist business law solicitor who has been practising for over 14 years, starting at the top international City firms, before then working at smaller practices and since 2013 for himself.

The Jonathan Lea Network is now a SRA regulated law firm that employs solicitors, trainees and paralegals who work from a modern office in Haywards Heath. This close-knit retained team is enhanced by a trusted network of specialist self-employed solicitors who, where relevant, combine seamlessly with the central team.

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