The growing business handbook : inspiration and advice ... - Sparkler

239
Preparing a
business for sale
9.4
Peter Gray at Cavendish discusses techniques for improving your worth to
potential buyers
Maximizing the valuation achieved on a company sale takes time and careful
preparation. Work can take place over a few months or even years before a
sale to enhance the attractiveness and value of a business to potential purchasers.
This is achieved by measures such as:
●●
●●
●●
●●
●●
identifying potential purchasers early and positioning the company to attract
them;
raising the public profile of the company;
maximizing recurring profits by reducing or stopping non-recurring costs;
improving margins through cost-saving measures;
eliminating excess working capital from the balance sheet.
A review of the business to determine appropriate pre-sale preparation should cover
the following areas.
Financial matters
Pricing review
Even where a company enjoys a degree of pricing power, it may choose not to fully
exploit that power. Generally, the pricing policy of a company is designed to maximize
long-term rather than short-term profits. This may involve keeping prices sufficiently
low to deter potential market entrants. However, in the context of sale, consideration
should be given to enhancing margins by increasing prices in the lead-up to the sale to
improve the bottom line.
Review of costs
A review should be undertaken to identify and eliminate all proprietorial costs that
would not be incurred by an incoming purchaser. Proprietorial costs may include