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Grooming Tips for your Business for Sale (Part 3)

8/29/2016

4 Comments

 
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Continuing the ideas that can help you get your business ready for sale. This week we focus on the Tax, Value and Timing in your business.

Tax Planning: Details of the various tax factors that you need to consider are set out in section 4 of this guide. Initial points to address include making sure that all your Corporation Tax, PAYE and VAT returns and payments are up to date. In addition, any tax losses that your company may have built up over the years may now have a value to the extent that they are available for use by the potential purchaser. Personal tax planning opportunities should be discussed with your tax adviser.

Valuation Expectations: You must have realistic valuation expectations. Valuation is important but do not let it get in the way of securing the sale.

Timing: Deciding the best time to sell your business can be a difficult decision to make. Factors to be considered when making this decision include the level of corporate activity in your industry; the state of the economy; changes in sector relevant legislation; and available tax reliefs (e.g. do you have to be a certain age to avail of certain retirement reliefs or pension planning opportunities).

It is better to sell your business on historical trends and results - they are a proven record of accomplishment that you can pinpoint and will provide you with a strong platform to negotiate from. If you have forecast a growth level of 20% for the coming year and can point to 20% annual growth for the last two to three years you can be assured of being in a more credible position. If, however you forecast 20% growth and have to justify that this is achievable by selling off part of the business, assets, cost cutting or increasing profit margins, the natural questions of potential buyers will be - “Why haven’t you done it already” and “Why should the purchaser share these potential post transaction gains with you?”


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