Maximising value on exit

Harris & Co

1st October 2018

Buying & Selling A Business

Harris & Co

PHIL Harris of Harris & Co, the Northampton-based chartered accountants has years of experience of advising businesses when they sell up.

At some point, every business owner will need to sell their business. The trick is to maximise the value when you decide to exit. There are a few fundamentals that you have to have in place if you are to achieve the maximum sale price. Some of these can be put in place, others can take years.

Phil explained: "We saw the value of grooming recently. One of our clients had had some offers at about £4m a couple of years back. They were interested, but the business had a few issues to deal with. We worked with them on a plan to groom the company for sale, and now the business realised £10m when it was sold."

Here are our top tips for getting these fundamentals right and getting the best price you can:

1. We see way too many businesses that are far too reliant on their owners. This is a fatal flaw for any potential purchaser and is the number one factor in depressing the value of your business. You need to create a management and operating structure around you that all but makes you unnecessary if you want to maximise the value of your business. Finding the right people and putting the right structures and processes in place can take years

2. All deals rely heavily on your figures so get your financials clean. You need to sort out your accounts - get them up to date, get all the key figures properly analysed and supported by documents. The buyer will send in investigating accountants, so make sure that it's all clean and tidy for them and then they will have no reason to try to reduce the price to cover off any risk that the numbers are not right.

3. Tax is another area where the buyer can be nervous and look to hold retentions or reduce the price to cover off any potential problems. Get your PAYE and VAT specially checked over by your accountants to make sure that there are no potential problem areas like undeclared benefits or sub-contractors who are really employees. If there are any issues, then get them resolved with HMRC as soon as possible.

For further details, contact Harris and Co on 01604 660661, email admin@harrisandco.biz or visit the website www.harrisandco.biz

Harris & Co