Planning Your Exit from Your Business

7. Planning a Trade Sale

A trade sale is usually the best way to get a good financial exit from a small firm, particularly if you have several competing buyers.

7.1 Identify possible buyers who might benefit from acquiring your business.

• Your market knowledge should mean you have a fair idea of who they might be.
• A corporate finance adviser will have a database of possible buyers and may be able to spot less obvious ones prepared to pay a premium price.
• Look in trade magazines and directories, and the financial press.

7.2 Work to develop characteristics buyers will really want. They may be seeking to:

• Gain access to a new market. For example, an overseas business might want to get a foothold in the UK.
• Get rid of a competitor.
• Get hold of a particular product, portfolio or contract you have. Will any of your contracts be nullified by a change-of-ownership clause in them?
• Get access to your staff and skills.
• Obtain synergies and cost-savings (eg through discounts or reduced overheads).
• Cross-sell their existing products or services to your customer base.

7.3 Put a good management team in place.

• If the business is too reliant on your own skills, its value to a trade buyer could be damaged. Or you may have to stay involved longer than you might wish.