Credible buyers will look to uncover any holes in your business as part of their due diligence process, so forewarned is forearmed. Seemingly small issues over accounts, record keeping, contracts or business structure can derail a good deal, or see an offer reduced. Take time to consider who owns the business, and what the business owns.
Think through your risks – any buyer will be doing the same. Does the business carry concentration risk in terms of customers, suppliers, products or management? Is there time to do much about it? Will some buyers be less worried than others?
As far as possible, ensure your administration is spick and span. Make sure that clients are invoiced, patents registered correctly, supply chains fully functioning. Does the business control its intellectual property? Are investment properties or other non-trading assets owned by the business?
Any buyer will pay close attention to cash flow, as this is the basis on which many businesses thrive or fail. Are significant contracts coming up for renewal? Is it possible to lock these down so the buyer will feel confident in future revenues during commercial due diligence? What debts are outstanding?
It can be worth bringing in outside help to give an objective view. They’ll be able to look at the business as a potential buyer would look at it. Identifying problems before the due diligence process begins can be money well-spent.