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Exiting your business:
Grooming your business for sale

When you are considering the sale of your business, you will want it to look its best, and this is where 'grooming' comes in.

Consider the value of your assets. If the business owns property, consider obtaining current property valuations. If there are any assets in the business that you think are worth more to you than they will be to a purchaser, consider extracting them from the business, possibly by a pre-sale dividend.

See if you can improve your profit and loss account. This could be by:

improving your trading efficiency

checking that your accounting policies continue to be appropriate and are not over-prudent

identifying any non recurring costs or personal expenses included in the accounts

identify any costs that would not be incurred, or would be incurred at a lesser level, by a potential acquirer

A buyer will not want any nasty surprises to emerge after the business has been acquired, and during the acquisition process the buyer will search for potential problems. You should ensure that:

all your tax, PAYE and VAT returns are up to date and that you are complying fully with the legislation. You should try to avoid a tax enquiry that is unresolved at the time of the sale, or giving the potential buyer any grounds for suspecting that there may be additional tax, interest or penalties charged for non-compliance

there are no ongoing legal disputes or areas where you might not be complying with the law, for example employment or health and safety legislation

you have protected any intangible assets with the appropriate trade marks and copyrights

In the sale of one of our client companies, the issue of whether there might, at some future date, be legislation requiring the cleaning up of potentially contaminated land almost broke the deal.

Remember that a risk which you think is negligible may well be considered a deal-breaker by the buyer.