Maximising profit from a business sale – and investing the proceeds wisely

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What you need to know


  • Selling a business involves a significant amount of preparation, both commercial and personal. Start the process early

  • Prospective buyers are interested in strong financials with the data to back it up. Having a strong management team in place is key, especially if you are stepping down

  • Don't be seduced by headline price – to get the most value from a sale, carefully consider the structure and terms of the deal

  • Be aware of how your finances and lifestyle will change. A wealth manager can help invest the proceeds of the sale

Selling a business is a goal that entrepreneurs spend years, often decades, working towards. For many, it's the culmination of all the hard work and countless hours they've invested in their vision.

A successful business sale is a time for celebration, but don't pop the champagne corks too early. There are many important decisions to make before – and after – a deal is done. Taking the right steps now is essential to achieving the future you want for yourself, your family and the company.

Firstly, you will want to maximise the returns from the sale. That means getting your business ready for a smooth transfer of ownership, and ensuring you have planned for tax and finding the right buyer.

Then, once the dust has settled, you should implement a longer-term plan for preserving and growing your newly acquired wealth.

Achieving the best deal

So, it's finally time. You want to sell your business.

Maybe you've received an unexpected offer, or market conditions are particularly favourable? Perhaps selling is the best thing for the future of your business, and you're ready to pursue new opportunities or enjoy a well-earned retirement?

Every business owner has different reasons for selling, but one piece of advice remains the same: start the process as early as possible to get the best results.

If your goal is to exit a company that you founded, and are currently managing, within the next two to three years, then you should be looking to appoint an adviser now.

This will enable you to properly prepare your business before approaching the market and potential buyers. During this time, you should focus on:

  • Financial outlook – buyers place a significant premium on contracted, recurring revenues. You should review your current model to improve metrics and, if possible, sell your business at a moment of strong profitability and high quality of earnings
  • Crunching the numbers – a success story is only as convincing as the underlying figures. Producing reliable and high-quality data enables you to present an ambitious, but realistic, financial forecast in your marketing materials
  • Stakeholder alignment – are the stakeholders within your business all on the same wavelength regarding a planned exit? Failing to address any disharmony between co-founders, family members or other key individuals could lead to costly setbacks further down the line.

The motivations for selling your business may also affect the type of deal you pursue.

Buyers often want founders and owner-operators to stay with the business for an earn-out period, which might not be ideal if you're looking to make a clean break. However, ensuring there is a strong, well-resourced management team in place will provide reassurance that you're leaving the company in safe hands.

When the time comes to sell, a structured, competitive auction process between interested buyers is key to achieving maximum returns. The headline price isn't everything though. You should also consider the structure and terms of each offer to determine which buyer is delivering the most value.

Beyond the business sale

There is much more to a business sale than the transaction itself. You must also prepare on a personal level for selling a company that you may have been involved with since day one. Mixed feelings are common.

At Rothschild & Co, we have corporate and personal advisory teams that can help you navigate all aspects of the business sale journey. As wealth managers, we see the rollercoaster of emotions that our clients go through during a sale. There is often joy and excitement at achieving one's professional dreams, but also concern for the future and sadness over the loss of a business.

The psychological impact of selling a business can take a toll, which is why it's important to discuss early in the process how it'll affect you, your family and other stakeholders. Media management assistance can be beneficial if you want help with any press coverage that may arise once the deal is finalised.

You may wish to transfer shares to minimise certain tax implications, or introduce a share scheme to reward your employees prior to selling."

From a financial perspective, there's also a lot to consider. Pre-sale tax planning is a must, as waiting until after a sale may limit your options and result in a less tax-efficient outcome. You may wish to transfer shares to minimise certain tax implications, or introduce a share scheme to reward your employees prior to selling.

More broadly, selling your business will lead to a change in your financial situation and lifestyle. We like to use an analogy that one of our clients once told us to describe this transition: you will now be drawing money from a 'lake' of wealth, rather than the regular and consistent 'river' of income you had before.

To ensure that lake never dries up, you need a post-sale financial plan to secure you and your family's future. A wealth manager can direct you towards help with important estate and inheritance planning processes, and also, crucially, with investing the proceeds of your business sale to create a reliable source of cashflow.

If you'd like to learn more about how we help clients throughout the business sale journey, please get in touch.

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Past performance is not a guide to future performance and nothing in this article constitutes advice. Although the information and data herein are obtained from sources believed to be reliable, no representation or warranty, expressed or implied, is or will be made and, save in the case of fraud, no responsibility or liability is or will be accepted by Rothschild & Co Wealth Management UK Limited as to or in relation to the fairness, accuracy or completeness of this document or the information forming the basis of this document or for any reliance placed on this document by any person whatsoever. In particular, no representation or warranty is given as to the achievement or reasonableness of any future projections, targets, estimates or forecasts contained in this document. Furthermore, all opinions and data used in this document are subject to change without prior notice.

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