Selling a professional services business is the culmination of decades of work. As well as the logistical and financial aspects of the sale, it can also be an emotional process as business owners hand over the reins to a company they may have spent years nurturing.
For many people, it will also be the first and only time they sell a business. So, having not been through a sale before, they may not appreciate that it can be a complex, stressful and time-consuming process.
If you have clients considering selling a business, here are five tips.
1. Start early
Getting the right buyer and the best price for a business means starting the same process between one and two years prior to completion. This may include:
- Managing any unrecoverable debts
- Mitigating any potential claims against the business
- Putting a sound business plan in place
- Making sure you have the right team to manage and run the business
- Ensuring all key contacts with suppliers and customers are in order.
Working closely with professional advisers (see below) will also help. You need to be able to demonstrate the profitability of the business, and that the business has been run efficiently and effectively.
2. Get the right advice
When you decide to sell a business, it can pay to choose your professional advisers at the start of the process. You will need trusted advice from a:
- Tax adviser
- Financial planner.
These advisers will perform a range of duties, from deciding on a valuation for your business to negotiating the terms of the sale. They may also produce the sales contract and confidentiality agreement for any parties interested in buying the business.
Your tax and financial planners can also advise you on both your business and personal position considering matters such as tax and estate planning.
3. Put in the hard work
If you’re selling a professional services business, you may have to invest a lot of time in ensuring your clients are engaged with the buyer (or buying company).
You may need to meet and engage with every one of your revenue-generating clients to ensure that they buy into the ethos of the buyer. This can also have an impact on your support staff who may face additional work, and so it’s important to ensure your team feel like a part of the integration process.
Once the sale is completed, there may be other issues that affect both staff and clients: for example, an office move. These changes can be disruptive and so it can pay to roll your sleeves up to ensure everything goes smoothly.
4. Manage the handover
If you have planned for the sale of your business, you may have already started the handover prior to the sale. For this process to work, it’s important that the people who are taking on your clients are engaged in the process, and perhaps even incentivised to facilitate a smooth handover.
For example, professionals staying within the business may have different ways of approaching client service and charging. Will the approach taken by existing staff fit with the buyer’s policies and procedures? And, if not, can they provide the service your clients expect?
5. Don’t forget the post-completion integration process
When the sale of a business finally goes through, it can be easy to breathe a sigh of relief as months of hard work and negotiation come to an end.
However, much of the work may have only just started. Using a Brexit analogy, the hard work didn’t end when the UK left the EU on 31 January. For many commentators, it had only just begun!
You are likely to have two concerns in the period immediately after the sale completes:
- What happens to your clients?
- What happens to your staff?
Depending on the terms of the sale, there may be a period when you remain in the business. Perhaps you’ve decided to take an ambassadorial role or you’re working part-time to look after some of your most important clients? You may therefore play an important part in the integration process immediately following the sale.
However, from the point of sale forwards, it’s important that you come to terms with the fact that you no longer own the business and that all decisions will now be made by the new owner.
Get in touch
We’re here to advise you and your clients on all aspects of financial planning. If you have clients that would benefit from advice, or you’re interested in how you can work more closely with us, please get in touch. Email firstname.lastname@example.org or call 01454 416 653.