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    Tag: business owner

    Five questions business owners ask when selling their business

    Posted on by Laura Bannan

    The PM+M corporate finance team speak to many business owners who open their conversations with questions like ‘What is my business worth?’, ‘How long will it take to sell?’, ‘What is the sale process?’, and many more.

    There are many variables involved in valuing and selling a business, from sustainable performance, trading history, future opportunity, and company structure, to personal circumstances such as the reason for sale, retirement plans, desired timeframe, acceptable deal structure, plus much more.

    At PM+M, we take to time to understand you, your business and your future goals and objectives to ensure we can support you in achieving the outcome you require. In our latest blog, we highlight the five questions we are commonly asked when speaking to people interested in the possibility of selling their business.

    1. Is selling the right option?

    It’s important to remember that the decision to sell your business is a significant one, and there’s no one-size-fits-all answer. Take the time to thoroughly assess your situation, gather information, and consider the potential implications before making a choice.

    Reflect on your motives for selling, and what your alternatives may be.

    Whatever your reasons, you should keep your end goal in mind at every step. Whether you have a minimum necessary consideration or a deadline you want to exit by, these objectives will make the process more focused. You should be prepared for the deal to take six to nine months at least, so getting prepared early will be crucial to reaching your goals.

    2. When is the best time to sell?

    Deciding to sell a business is an extremely personal decision and the factors at play will differ from person to person. Determining the best time to sell your business involves a combination of internal and external factors. While there’s no one-size-fits-all answer, some factors to consider are:

    • Financial performance: Selling when your business is experiencing strong revenue and profit growth can make it more attractive to potential buyers and increase its valuation. Buyers prefer businesses with a history of consistent financial performance, so consider selling when your business has a track record of stable earnings.
    • Industry and market conditions: Assess whether there’s a demand for businesses like yours in the market. Selling when demand is high can attract more buyers.
    • Personal and lifestyle goals: Consider your own readiness to sell. Are you looking to retire, start a new venture, or make a lifestyle change?
    • Tax implications: Consult with a tax adviser to understand the tax implications of the sale.  It is crucial to understand net as well as gross proceeds.

    Ultimately, the best time to sell will depend on a combination of these factors, as well as your individual circumstances and goals. It’s important to consult with professionals to get a comprehensive understanding of the current market conditions and the potential impact on your business’s value.

    3. How do I know how much my business is worth?

    Business owners often want to understand the fair market value of their business before selling. This involves assessing the company’s financials, assets, liabilities, growth prospects, industry trends, and recent comparable sales. A professional adviser can help ensure a more credible valuation that takes into account all relevant factors.

    4. What should I do to prepare for the sale process?

    Preparing your business for the sale process is crucial to maximise its value, attract qualified buyers, and ensure a smooth transition. Consider the following:

    Financial preparation: Ensure your financial records are accurate, up-to-date, and well-organised. Consider the preparation of detailed management accounts and provide detailed financial projections that showcase the business’s potential for growth and profitability. Address any unresolved financial issues, discrepancies, or liabilities that could deter potential buyers.

    Systems and controls: make sure all systems are transparent and easily accessed. Consider whether further management information systems or financial controls should be introduced. Also create detailed documentation of key business processes, workflows, and operating procedures to demonstrate that the business can operate smoothly without your direct involvement.

    Key contracts: review all material contracts and ensure they are available for the due diligence process.

    Management and employees: plan for your departure from the business with a succession plan. It is important that the management team are prepared to continue after the sale. This will help ensure a smooth transition and help give potential purchasers reassurance.

    Remember that the preparation process can take time, so it’s advisable to start early. Thorough preparation increases the likelihood of a successful sale and a positive transition for both you and the new owner.

    5. Should I seek advisers to assist with the sale?

    Selling a business is a complex process that involves legal, financial, and strategic considerations. Professional advisers can provide valuable expertise, guidance, and support to ensure that the sale goes smoothly and that you achieve the best possible outcome.

    They can advise on the valuation of the company, compile an information memorandum for potential investors, assist with facilitating due diligence information, shape the transaction and maintain value protection throughout the process. Taking tax advice is also fundamental to ensure that the sale is structured in the best possible way.

    Be sure to select advisers you trust, and that you will have a good working relationship with. Remember that each business is unique, and your needs may vary based on the size of your business, the industry you’re in, and your personal circumstances. The expertise of these advisers can significantly enhance your chances of a successful sale and a smooth transition. It’s important to carefully choose advisers with relevant experience and a proven track record in business sales.

    There are many aspects to consider when thinking about selling a business. Early planning is essential to ensure you achieve the best sale price, minimise risks and optimise your tax position. Our advice is to engage with experienced professionals from the outset who will guide you through the sale process, from valuation through to negotiation and due diligence, providing invaluable insights on how to achieve a successful sale and ultimately helping you realise your future objectives.

    Working collaboratively with our accounting, tax and financial planning specialists, the PM+M corporate finance team have capabilities to provide services for the whole business life cycle ensuring the desired outcomes are achieved.

    If you are thinking about selling your business, want to know how much your business is worth, want to discuss your specific situation in more detail, or anything else corporate finance related, please get in touch by emailing: ryan.bilsborough@pmm.co.uk.

    As a director or business owner, are you aware of all your pension options?

    Posted on by Katie Heaton

    Although most are fully aware of the more traditional personal pension options, as a director or business owner, there could be further options to consider for maximising your retirement savings. Two options which are often considered are a Self-Invested Personal Pension (SIPP) or a Small Self-Administered Scheme (SSAS).

    Self-Invested Personal Pension

    A Self-Invested Personal Pension (SIPP) gives you the ability to invest in a wider range of investment options (within the rules of the SIPP provider). Your pension can be used to invest in stocks and shares, invest in collective investments as well as commercial property.

    A business owner is also able to purchase their business premises within their SIPP and then rent it back. This option gives you greater control over your future, unlocks higher potential returns than standard savings accounts, and may benefit from tax reliefs.

    Small Self-Administered Scheme

    A Small Self-Administered Scheme provides all of the investment avenues and potential benefits of a SIPP but there are a few differences.

    With a SSAS you and up to 10 others can also provide a loan facility back to your company. With a SSAS assets are pooled and members hold a proportionate percentage based upon their contributions or assets transferred into the pension.

    The benefits of the SSAS are three-fold: as well as establishing a diversified investment portfolio, you are also able to provide affordable financing for your business, which can help with day-to-day running costs or even help accelerate growth. Also, the sponsoring employer can pay the SSAS fees.

    Summary

    As with any investments, the level of return is never guaranteed, and it is essential to seek advice based on your individual circumstances to ensure any decisions you make are in your best interest. The complex nature of both the above pension structures and the rules that must be carefully followed mean that they are not always suitable for everyone.

    For further information on the above pension options or for more general financial advice, get in touch with a member of our financial planning team today by emailing enquiries@pmm.co.uk or calling 01254 679131.

    A comment to note that the article does not constitute personalised advice and that advice should be sought before taking any action.

    Recession-proof your business – are you prepared?

    Posted on by Katie Heaton

    With increasing uncertainty for businesses, we advise to keep calm, plan ahead where possible and seek advice early to avoid exposing your business to any unnecessary risks. With careful planning and use of the correct tools, we can help prepare various ‘what if’ scenarios and discuss the best course of action to take should they occur.

    Our recession planning team is made up of specialists from across the firm including cloud accounting and corporate finance experts. Here are some of the main tips the team has highlighted to ensure your business is well prepared to navigate a recession:

    Carefully monitor and manage your cashflow

    Managing and closely monitoring the cashflow of your business should be a top priority when preparing for a recession. To do this you should have reliable and up to date accounting data that allows you to prepare financial projections and forecasts so you can predict your cashflow trends in advance. Having cloud accounting software which gives you a snapshot of your current financial position will enable you to quickly produce and review your cashflows and identify any potential funding needs. You may also want to think about moving your clients to direct debit or looking to shorten your payment terms.

    Review funding and improve your credit score

    If you want to obtain the best payment terms from your suppliers or the most attractive lending rates from funders, you should ensure your credit score is as strong as it can be. It may be an appropriate time to consider a different lending product with a fixed rate instead – ensuring certainty over your future outgoings.

    Focus on your people

    Staff retention should be at the forefront of your agenda when anticipating a recession. Although downsizing may be inevitable for some businesses during a recession, consider other options such as reducing hours and providing flexible options as an alternative.

    Ensure your customers remain a priority

    Customer retention must remain a key focus during a recession. Invest in customer relationships, reward loyalty, communicate regularly and work hard to supply what your clients want in uncertain times.

    Don’t cut back on marketing

    In difficult times, when you may be trying to cut costs, reducing expenditure on marketing can seem like an easy fix. However, continuing your marketing efforts during periods of disruption is important, as it will mitigate any drop in sales and ensure your brand awareness remains high.

    There is no doubt that the coming months are going to be turbulent times for many, but with forward planning and a sensible approach, you can make things a little easier. For further advice, contact a member of the recession resilience team by calling 01254 679131 or email enquiries@pmm.co.uk.