Business Mouth - Business Blog

When preparing a business for sale, it is essential to concentrate your efforts on maximising its value. 

There are several stages to the process but they centre around analysing where spending can be cut and where spending needs to increase in order to gain ‘quick wins’.  These enhance how your business looks on paper and help you optimise the business’ strength in order to fetch the highest possible sale price.  Profitability is important when selling a business. Therefore, do what it takes to show that your business can make money for the prospective buyer, and you never know, you may even reap the benefits in the short-term as well. Once you are confident that the value of your business has been maximised, the next step is to seek the help of a solicitor or an accountant who can advise on the most appropriate valuation technique to use for your business. Marketing the business as up for sale is the next step and listing your business in a ‘businesses for sale’ publication can be an effective way to target genuine prospective buyers saving you time and money.

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 According to several business brokers I have spoken to over the past few weeks, the number of small businesses for sale has dropped significantly. Everyone said that they had fewer businesses on the books and had not closed many deals.

The drop in sign-ups is partly due to prospective sellers concerns about the lack of buyers with access to funds. And fewer buyers means lower transaction values.

Carl Cusano of the New York Business Brokers Association offers the following advice to sellers: “If you’re serious about selling, you have to consider seller financing because the banks aren’t handing money out as they were in years past.”

Cusano added that business brokers were feeling the pinch across the US and he knew several that were about to go to the wall.

Businesses for sale website bizbuysell.com have reported a 20% reduction in the number of completed transactions in the last quarter of 2008.

Across the pond in the United Kingdom, Business-sale.com, the leading provider of information on medium to large businesses for sale, also reports a downturn in transactions as reported by buyers.

Information director, Robert Moore, said that it is hard to get a real fix on the industry figures because so many deals are private and there is a reticence to divulging transaction details in the UK.

But Moore said, “this is a remarkable period of opportunity for many entrepreneurs. There are low interest rates and low inflation forecasts. Hundreds of businesses are going under because they simply cannot service their debt commitments, even though their underlying fundamental business is sound. Smart operators with cash are mopping up, buying these distressed business and either paying off the debtors or using a pre-pack administration order to create a clean company.

“They are left with some great businesses producing returns far in excess of what is achievable on the stock market or in bonds or other savings accounts.

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