Business owners should always know their business is sellable, even if they don’t want to sell it just yet.
Start by taking this 10-question “Sellability Index” quiz from John Warrillow, author of “Built to Sell”:
Less than 20 points:
You’re not ready yet. You need to improve your score before you sell your company. Focus on making changes in your business so that you are able to give more “C” and “D” answers on the Sellability Index Quiz.
20-29 points:
You are making good progress and you’re almost there. Make changes to your business so that you can provide more “C” and “D” answers and you will have something you can sell for a good multiple.
30-39 points:
Congratulations, you’ve built a sellable business. The most likely candidate to buy a business like yours will be found internally e.g. your management team or a family member. Unless they have the money, you’ll need to settle for a lower valuation and agree to be paid your sale proceeds over time. For a better valuation and to get more cash up front, work on improving your scores to get them to the 40-50 point range.
40-50 points:
Congratulations! You’ve built a sellable business. Expect to be offered somewhere between 3 and 6 times your pre-tax profit, less any debt. You will likely get offered 50 to 60% of the cash at completion, with the balance being paid over a 2- to 3-year earn out if you achieve certain milestones that the buyer sets out in a share purchase agreement.
What to do next?
The Corporate Finance Network has exclusively devised a process around the “Built to Sell” methodology.
As member firms of The Corporate Finance Network, we have access to this process to help identify the specific steps that you need to take in your business.
So get in touch with us now to discuss how we can make your business more sellable.
You may not want to sell your business right now, but you should always know that you could.
Andrew Watkin
Andrew is the director of Assynt Corporate Finance Limited and an Accredited Member of the Association of Crowdfunding experts.
Previously a partner and head of corporate finance at Baker Watkin LLP, Andrew has more than 35 years of experience in all forms of corporate finance across many business sectors.
Andrew is also the Chair of Governors at a local school and an Assessor of Expeditions for THe Duke of Edinburgh’s Award.
You can find out more and connect with Andrew over on LinkedIn.
Need Help? Contact Andrew at Assynt:
If you are serious about selling your business, contact Andrew to arrange an informal chat, in person or over the telephone to assess the options open to you.
You can also contact Andrew by email at: awatkin@assyntcf.co.uk or by completing the form on this page.
Call today on 07860 898452
