Selling a Business

3. Grooming the Business

Showing the business in the best light is a crucial factor in gaining the best possible price.

3.1 Create a good financial record.

• Concentrate on short-term results.
• Try to show a stable financial pattern through the year. Delay or bring forward major purchases to help achieve this.
• Be realistic when using depreciation figures or the timing of income in your accounts. Provisions for bad debt and old stock should also be realistic.
• Sell under-used equipment and property.
• Improve your working capital position, by good stock management and tighter credit control (see Credit control).

3.2 Make sure management information systems are working smoothly.

• Buyers will want information quickly.
• You need to show that the business is under control.
• Ensure the information is accurate. A buyer's confidence will be undermined by errors.

3.3 Present the assets in good condition.

• Premises and equipment should look well maintained.
• Stock should be neat and orderly.

3.4 Make the business less risky from the buyer's point of view.

• Turn informal deals with suppliers and customers into formal contracts.
• Establish sensible incentive schemes to encourage key employees to remain with the business (see Incentive pay).
• Reduce dependence on a few large customers or a single source of supply.
• Tie up any loose ends. If your tenancy agreement is due to expire soon, make sure the landlord will agree a new one.