Selling  your  business  and  creating  a  business  sales  pack  for  the  buyer    The  decision  to  sell  your  business  is  straightforward.  You  worked  very  hard  for  many  years  to  create  your  successful  business  and  naturally  you  deserve  top  value  and  now  it  is  time  to  move  on.  There  could  be  many  reasons  why  you  have  made  the  decision  to  sell.  You  may  wish  to  retire  or  emigrate  or  just  try  another  venture.      Preparing  your  business  for  sale  is  not  an  overnight  process.  It  can  take  months,  if  not  years,  of  planning  to  maximize  your  value.  Always  assume  that  any  potential  buyer  will  do  a  thorough  job  of  due  diligence,  which  will  ultimately  uncover  weaknesses.  Proper  planning  will  identify  current  problem  areas  and  help  you  determine  how  to  treat  them  in  discussions  with  buyers.    There  are  a  few  points  that  you  may  not  be  aware  of  but  the  first  is  that  every  owner  must  realise  that  their  business  is  competing  in  the  market  place  with  other  sellers.  Every  business  is  in  competition  with  other  businesses  for  sale  within  their  Profit  Range  and  general  Industry.    The  next  point  is  that  the  sale  of  a  business  does  take  time.  Internationally  the  average  is  between  6  and  9  months.  Unfortunately  in  SA  we  don’t  have  any  stats,  but  the  reasons  are  generally;  business  is  overpriced;  not  receiving  sufficient  information  or  audited  financials;  hidden  income.      The  phrase  "timing  is  everything"  is  especially  true  when  selling  a  business.  In  evaluating  your  company’s  present  position,  outlook  and  capabilities,  consider  the  following  questions:    

1. Are  the  company  and  its  products  reaching  maturity?  Studies  have  shown  the  maximum  value  is  achieved  when  a  sale  occurs  while  revenues  and  profits  are  still  growing  at  or  above  historical  rates.  

2. Can  the  company  show  a  history  of  stable  growth  and  profitability?  3. Is  the  industry  reaching  a  mature  stage  or  experiencing  rapidly  changing  technology?  4. Are  the  products  losing  their  uniqueness,  and/or  is  the  company  unable  to  make  the  commitment  

necessary  to  invest  in  new  product  development?  5. Is  there  an  adequate  supply  of  raw  materials  and  people?  6. Is  competition  likely  to  increase?  7. Is  the  company  at  or  near  capacity  such  that  future  growth  requires  significant  capital  

expenditures?  8. Does  the  company  lack  a  well-­‐defined  strategy  for  future  growth  and  profitability?  

         More....      

You  need  to  prepare  an  Information  pack  with  the  following  information:    

a. The  last  2  years  audited  financial  accounts;  b. The  most  up  to  date  management  accounts;  c. The  last  12  months  Vat  returns;  d. A  list  of  all  the  assets  (Machinery,  equipment,  furnishings,  vehicles  etc.)  in  the  business  with  a  

realistic  second  hand  value.  (Not  depreciated  nor  new);  e. A  list  of  items  on  HP  or  Lease  with  settlements  amounts;  f. A  list  of  trademarks  and  patents;  g. The  approximate  cost  value  of  present  stock;  h. A  copy  of  your  present  lease  of  your  premises;  i. A  copy  of  your  business  licenses  and  registration  documents,  if  applicable;  j. Current  shareholders  agreements  in  place;  k. A  synopsis  of  your  business  with  future  opportunities;  l. List  of  product  and  service  lines  and  related  intellectual  property;  m. A  list  of  your  businesses  key  competitive  strengths;  n. A  summary  of  competitors  and  their  strengths  and  weaknesses;  o. The  geographical  stronghold  and  distribution  list  p. A  list  of  staff  with  job  functions  and  salaries/wages  (no  names);  q. A  redundancy  list  with  estimated  costs;  r. A  synopsis  of  your  sales  strategy  before  and  after  sale;  s. General  internal  records  and  management  reports;  t. Prepare  a  business  plan  or  budget  for  the  prospective  year(s),  with  budgets;  u. Working  capital  requirements  after  sale;  v. Prepare  an  organization  chart  showing  functional  areas  of  responsibility;  w. Include  a  description  of  capacity  in  your  production  departments  /silo’s;  x. Document  the  product/process  flow;  y. Promotional  materials,  product  samples  and  examples  of  marketing  collateral;  z. Industry  information  from  trade  associations  or  independent  research;    aa. A  list  of  general  ‘housekeeping’  policies  and  procedures;  bb. A  preliminary  valuation  analysis  to  determine  and  justify  the  asking  price;  cc. Justification  on  the  underlying  level  of  sustainable  profits;  dd. A  summary  of  reasons  why  you  want  to  sell;  ee. SWOT  analysis;  ff. A  list  of  non-­‐negotiable  items  such  as  earn-­‐out  periods  and  autonomy;  gg. Key  management  exit  strategies  and  succession  plans  hh. A  non-­‐disclosure  agreement  to  continue  discussions.