3 ways to execute the successful sale of your business

You are ready to sell your business! You’ve been leading up to this, marking the dates off the calendar, and building with this moment in mind.

With the time drawing nearer, you now need to decide how you’re going to make your exit.

You have three options: make it happen alone by doing it yourself, use a buyer’s broker, or appoint an M&A adviser, a lot like us.

Read on to learn more about what’s involved in each option and which might best suit you and your goals.

1. Go it alone and sell your business yourself

If you have clear knowledge about the business or people you intend to sell to, going it alone with a DIY approach might work.

Naturally, one of the best benefits of this route is that you don’t have to pay a middleman.

Yet this could result in lost value. So, the supposed cost saving might backfire, as you may end up selling for a lot less than you might have achieved with an expert guiding the way.

Indeed, we have heard from buyers who have boasted about having successfully bought businesses for one to two times the recurring revenue where they’ve had a direct approach, without competitive tension.

As a result, some people do end up selling for a whole lot less than their business is worth.

Of course, we know it’s not all about the number, and your suitor may tick a load of other boxes.

You may be a master negotiator or experienced in business sales, you’ve crunched the numbers and know what your business is worth, and have the confidence to negotiate that contract alone.

If this is the case, you might be confident that you can find a buyer and sell for the figure you want without expert support.

2. Use a buyer’s broker

Something we repeatedly explain is that selling a business is complex and time-consuming. This is one of the key reasons brokers exist – they can save you time and introduce you to a range of buyers you wouldn’t have had access to otherwise.

Having a broker onside certainly prevents the “cheeky offers”, because they understand fair value and the buyers know they are in a competitive process.

Using a broker is fine, but make sure you know what side their bread is buttered. Unless you’re paying them, they are ultimately working in the interests of the buyer.

If a broker will be paid a fee or commission by the successful buyer for securing your business, then you are selling your business through a buyer’s broker. And that commission will be coming from the deal, which means a portion of the money will go to the broker instead of into your pocket.

You may also find that there are potential conflicts to watch out for.

For example, the broker will only introduce you to firms they have already agreed terms with.

Remember, this isn’t a regulated space. Some brokers may “wheel and deal”’ a bit. They might have agreed different terms with different buyers, meaning you may find they push you down a certain route so that they earn a higher fee.

So, while a broker will carry a lot of the burden by managing the sales process on your behalf, don’t be afraid to ask questions and find out more about how they are being paid in the process and what this means to you.

We once heard a broker suggest their fee came from a “golden pot” that has no impact on the sellers value. We can confirm you are more likely to find a pot of gold at the end of a rainbow.

3. Appoint an M&A adviser

An M&A adviser will look after all aspects of a sales process. Unlike a buyer’s broker, they are working for you and you’ll be the one paying for their services, effectively putting you in the driver’s seat alongside your expert adviser.

A good M&A adviser will also help ensure you’re fully prepared before you embark on the sales process.

Depending on circumstances, this could include all or any of the following:

• Evaluating the value of the business
• Preparing for sale
• Identifying prospective buyers
• Marketing your firm
• Attending meetings with you
• Negotiating details
• Project managing to completion.

At Melo, we work purely for sellers.

Unlike buyers brokers we are independent. We work for you, not for the buyer – and we’ve always got your back.

Get in touch

When you’re looking for support with something as important as selling your firm, you need to know you’ve got the best team in your corner. Together, you and us, make a powerful team, helping to ensure you have the very best of exits.

Drop us a line at hello@melo.co.uk or call 0113 4656 111 for a chat.