You’ve had a tempting offer to buy your business: what should you do?

Before you crack open the champagne, you need to read our advice.

So you’ve had an offer to buy your business. How does that make you feel? Flattered? Excited? Maybe you’re already visualising sailing off on a yacht to your dream life, leaving the stress of running a business behind. It could be that after years of hard graft this is the moment you’ve been waiting for.

No matter what your motivation is, if you’ve been approached by a potential buyer and you’re serious about selling your business there are some really important things to be aware of. Here’s our advice to help you through the process:

Watch out for red flags

Small businesses are approached with offers more often than you might think. Exit UK Business Brokers reports that 90% of these offers are fake. That’s not to say yours isn’t among the 10% of genuine offers. Trust your instincts. Do your due diligence as you would before starting any new business relationship.

If alarm bells are ringing, we’d summarise the major red flags as follows:

• The offer is from a competitor – Their interest in acquiring your business might seem real, but often they’re digging for information. Even if they’re ‘genuinely’ interested in buying you out, it’s a long road from an initial conversation to a formal deal on the table and a LOT can happen in between. If the deal were to stall at the 11th hour, they could potentially be walking away with a lot of useful insight and information about your business.
• The offer is from a Business Broker – A broker might start the conversation with “We have eager buyers looking for businesses just like yours” (or words to that effect) but most are, at best, stretching the truth, and at worst outright lying. Several business brokers have large cold calling operations; they call everyone in their database and give them the same line. They might approach you by phone, email, or letter, but it’s still a fishing expedition!
• The buyer included a figure in their offer – A genuine buyer would not mention figures until they’ve had an expert look through your books, the operations, the tax returns, and various other paperwork. Anyone coming up with a number at the start of the process is on a ‘bait and switch’ operation. They’re trying to tempt you with a figure and they’ll start chipping away at it later through negotiations.

Recognise when it’s a good deal

It may seem counterintuitive, but selling when you’re on the up-and-up can make you even more attractive to potential buyers and fetch you a fantastic price that reflects the future value of the business.

If you have multiple potential buyers, this puts you in a great position. If a buyer has approached you or come up with an offer, it falls upon you now to find other buyers to create competitive tension and secure the figure you deserve.

Alternatively, and regardless of how much you love your company, you may have realised that you’re no longer an asset to the business. It might be time to cash-in the rewards of all your hard work and hand over the reins to someone who has the requisite skills to power the business forward.

Remember, selling isn’t the only solution to exiting the day-to-day of running the business. Talk to your trusted advisors and weigh up the pros and cons of all your options.

Know when to call your accountant

Selling a company can be extremely stressful, especially when you don’t have the right people around you. If you’ve had an offer to buy your business and you’re not sure what to do next, there’s really no substitute for calling in professional advice. Your accountant should help to prepare your business and assets for sale, assist you with your terms, and act as an invaluable objective viewpoint throughout the process.

If you’ve had an offer to buy your UK business, get in touch.

We’ll be more than happy to give you further tips on strategy and help you get the best outcome.

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