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Selling your business for a fair profit – Where do you start

MoneyMagpie team 10th Jun 2024 No Comments

Reading Time: 2 minutes

Selling your business can be a tricky process to navigate. It’ll likely represent a substantial portion of your life’s work, and deciding how you want to sell the business – and who you want to sell it to – will require thinking about a range of unexpected variables.

Part of that process will include coming up with a fair price to ask for your business. Here, we take a look at how you can work towards that in as honest a manner possible, from the details of the valuation process itself to negotiating with potential buyers.

Be thorough with your valuation

The most important thing to take care of when selling your business is to carry out a thorough valuation. In most cases, it can be beneficial to get this carried out by a third party. They’ll be able to look at your liabilities, assets, annual turnover and costs, and predicted growth; based on this wide range of variables, they’ll be able to provide you with an objective valuation removed from any sentimentality that might otherwise warp your perspective.

Contact a business broker

For help with the sale more generally, it can be incredibly helpful to get assistance from a business broker such as Dexterity Partners. They’ll be able to take a look at your valuation, and then compare it with other businesses of a similar nature that they’ve sold in the past. 

Based on this, and their knowledge of the market from the sides of both buyers and sellers, they’ll be able to ensure that the profit you end up chasing is as fair as possible. It might mean changing your expectations slightly, or waiting until the business is in a better condition – this will all depend on your goals from the sale, and how much effort you’re prepared to put in.

Be prepared to negotiate

Lastly, when it comes to getting a fair profit from the sale, you need to take the buyer’s perspective into account. This will likely be made a lot clearer when you start to negotiate the details of the sale. 

What’s fair and what isn’t will depend on how much they’re prepared to pay for the business, which in turn will be based on why they want to buy it, how much capital they have access to, and a range of other factors. 

Ensuring fairness at this stage simply necessitates a clear and honest approach to negotiation and communication. As long as you lay your cards on the table and don’t deceive one another, the end result should be satisfactory for both parties.

If you’re still unsure about how you’ll put these tips into practice, don’t worry. It’s a complex process that you’ll likely need help from solicitors, business brokers, and accountants to navigate. Aiming for a profit that’s fair to both yourself and the buyer requires an external perspective, and even then it’s never black and white. By entering into the negotiation process with an open mind, you can ensure that you commit to a sale that you’re truly comfortable with.

Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence.

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Jasmine Birtles

Your money-making expert. Financial journalist, TV and radio personality.

Jasmine Birtles

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