How to Prepare for a Successful Exit when Selling your Business

Navigating a sale successfully requires careful preparation, strategic thinking, and the right team of advisors, writes Adrian Patton, Partner at Sumer Northern Ireland.

Whether the sale is motivated by retirement, a change in life priorities, or the opportunity to financially benefit from your hard work, there are key steps that can make the difference between a smooth, profitable sale and a stressful, disappointing experience. Preparation is just as important as the sale itself. Being ‘sale ready’ helps you avoid selling below value, mistiming your exit, or missing a major opportunity.

The most successful exits don’t happen overnight. Ideally, you should start planning two to three years before you want to sell. This gives you time to address potential issues, strengthen financial performance, optimise operations and build a strong management team, which is particularly important if you have been heavily involved in the day-to-day running of the business. A strong team will also facilitate a smoother sale and give comfort to the buyer that operations will continue with minimal disruption.

A buyer will look to acquire a business that offers predictable cash flows, growth potential, and minimal or managed risk going forward. Work with your advisors to benchmark your business against industry standards or competitors and identify opportunities for you to improve your business in advance of a sale.

The ability to prepare timely and accurate financial information is non-negotiable. Strong financial reporting instils confidence and helps sellers attain the best price. Buyers will conduct thorough due diligence, and unorganised or incomplete books can stifle deals or drive down the price. Check your figures, review KPIs and understand your trends so you can explain this to an interested party. It’s important to be able to identify normalised earnings by identifying one-time expenses or owner-specific costs.

Selling a business takes a team effort. You need experienced advisors to guide you through the process and help you avoid pitfalls. With the right team in place, you will be well-positioned to navigate complex negotiations and achieve the best possible outcome.

Not all sales look the same. There are several options depending on your goals and objectives for the sale which include:

• Selling to a competitor or larger company that sees synergies (strategic sale)
• Selling to a financial investor looking to grow the business (private equity)
• Selling to your management team (management buyout)
• Passing the business on to family members (succession)

Each option has different implications for price, terms, and your future involvement. Your advisor can help you identify which is the strongest route to sale.

Due diligence (DD) is where deals are made or broken. As the transaction progresses, the level of detailed information and queries received from a buyer will increase. DD is a process of verification, identification and investigation of all relevant facts about a business and gives the buyer confidence that they understand exactly what they are acquiring. Being prepared for DD and being transparent throughout the process is vital.

It’s easy to focus entirely on closing the deal but it’s important to plan what happens next. Consider how much you need financially to maintain your lifestyle and what role, if any, you want to play in the business post-sale.

Selling your business is one of the most significant financial decisions you will ever make. By planning for the sale and engaging the right advisors, you can secure the best value for the business and ensure you control the process throughout.