Selling a Business

2. Getting the Right Advice

Choose advisers who specialise in selling businesses.

2.1 Good advisers can fill many roles, such as:

• Boosting your credibility and making negotiations go smoothly.
• Providing a realistic business valuation.
• Approaching potential buyers without revealing your identity.
• Widening the list of possible buyers.
• Allowing you to run the business while they concentrate on selling it.

2.2 Consider using a combination of advisers to cover all aspects of selling.

• A corporate finance adviser can help groom the business (see 3), identify buyers, and write the Sales Memorandum (see 4).
• A non-executive director can offer objective advice and support.
• A corporate lawyer can draft and negotiate the Sale Agreement.
• A tax accountant (or lawyer) can minimise your tax liabilities.
• Specialists can accurately value assets.

2.3 Agree a clear fee structure. There are three main ways of charging fees:

• An hourly rate. Obtain an estimate of how many hours' work is required. Agree an upper or a review limit, and the timing of interim fee statements.
• A fixed rate for a certain piece of work (eg drawing up the Sales Memorandum).
• A contingency fee dependent upon success and the eventual sale price.

2.4 Divide responsibilities between advisers.

• The instruction and fee basis for each adviser should be clear and in writing.
• Avoid overlapping responsibilities, but seek second opinions on important issues.
• Agree the lines of communication and make sure each party knows its responsibilities for dealing with enquiries. Take care to define who is doing what and coordinate the process.