For many entrepreneurs, the opportunity to sell a business will be a culmination of a lifetime’s work and is likely to be the most significant financial decision of their life.
A modest investment in producing regular management accounts will provide an accurate picture of a company’s performance and financial standing. The information will allow the seller to highlight areas of potential risk and improvement thus enabling informed decisions to be made and value to be maximised.
With the current economic climate in a volatile state and with investment risks greater than ever, buyers are more cautious and we have seen deals delayed or collapse completely because the sellers had not seen the value of investing in accurate, timely financial information.
This information provides the prospective buyer with detail of the current trade, allowing them to commit to a transaction. It also ensures that the deal can accelerate through the detailed financial due diligence process. The due diligence process is time-consuming and can be a significant distraction for the sellers due to the level of detailed information that is required.
A successful business sale is driven by managing the information flow to the buyer. Whilst accurate, timely information will not in itself attract a buyer, the lack of information will create uncertainty and can ultimately kill a transaction. Therefore, a modest investment in preparing information will allow you to realise and retain value through a disposal process.
If you are contemplating a disposal an early conversation with an experienced corporate finance advisor will pay dividends as they will understand the motivations of a buyer and can identify what information will be important to ensure your story is told and value is maximised.
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