Get ready to sell your business
- Gé Sletterink
- 19 Apr 2023
- Edited 28 Nov 2022
- 2 min
- Selling and takeovers
You will find it easier to sell your business if it looks appealing to potential buyers. It will increase your chance of getting a good price. Explore if any changes may be needed in terms of management, the internal organisation, the businesses’ tax and legal structure, and financial management. Also, make a transfer plan to set out all the steps needed for the business sale.
If you own a smaller business, you will generally be the face of the business and the business may actually depend on you. Try to delegate tasks and responsibilities to staff members, reducing the business’ dependence on you.
The internal organisation
Make sure your business’ internal organisation is in order. That means having a clear business strategy and paying attention to such things as:
- contract duration
- current permits
- environmental requirements and other requirements
- current records
- effective debtor management
- clear inventory management
Tax and legal structure
Tax and legal aspects play an important role when transferring a business, as changing the legal form of a business can have tax benefits. Due to tax deadlines, changes like this have to be finalised several years before the transfer, so make sure you get good advice and start on time. It is important to remember that you will also have to settle your taxes with the Dutch tax administration after the transfer.
You can compare your business's performance with that of other businesses in the same industry. If you are not doing as well as other businesses in some respects, try to find out why and do so well in advance. After all, improving your profitability (return on investment) or solvency (equity-to-debt ratio) can take anywhere from 3 to 5 years.
Value your business
Is your business healthy and in order? Then you can now go about valuing your company and setting the price. As a seller, you will look at the value of your business differently than a buyer. Using different valuation methods, you can make an informed valuation. You determine the asking price from this.
If you are planning to sell your company, you may want to draw up a transfer plan. In a transfer plan you outline how you will approach the sales process and provide an analysis of your business. Throughout the process, you can keep referring back to the plan to make sure you are still on track.
Contents of a transfer plan
In a transfer plan, you will find everything you need to properly arrange the sale of your company. For example:
- reason for and objective of the sale
- main features of the business
- the business’ strengths and weaknesses
- the business’ threats and opportunities
- the business’ objectives
- how you will approach looking for a buyer
- description of potential buyers (buyer profile)
- which advisors you will enlist
- negotiation strategy
The plan should also outline a time frame for selling your business. So make sure to link each part of the transfer plan to a (general) schedule. Decide whether or not you will continue to have a role in the business after the transfer.
What happens next
The preparation phase of selling your business is now over. Your business is ready to be sold, you have set a value and price, and the transfer plan lists all your actions. Now it is time to proceed to the next step: finding a buyer.