How to prepare a business for sale

1. Define the owner’s objectives and transfer route

Start with the outcome the shareholders want: timing, acceptable level of involvement after completion, confidentiality constraints and financial objectives. The preparation differs depending on whether the likely successor is a family member, the management team, an industry buyer or an investor.

• Clarify the desired timetable and degree of urgency.
• Identify shareholders’ personal and financial constraints.
• Assess family, management and third-party options.
• Agree who can be informed and at what stage.

2. Assemble buyer-ready financial information

Buyers need to distinguish recurring performance from one-off events. A credible information pack reconciles management reporting with statutory accounts and explains unusual movements before they become negotiating points.

• Three to five years of accounts and current trading figures.
• A documented business plan with realistic assumptions.
• Normalised EBITDA and clearly evidenced adjustments.
• Working-capital seasonality, debt and cash requirements.
• Tax history, open audits and usable tax assets.
• Shareholder accounts and related-party transactions.

3. Remove operational and legal obstacles

Review the company as a buyer will. Concentration, undocumented know-how, unresolved disputes or contracts that cannot be transferred can all affect deliverability and value.

• Customer and supplier concentration and retention risks.
• Key-person dependency and management succession.
• Employment terms, remuneration and family employees.
• Ownership of intellectual property, property and equipment.
• Change-of-control clauses, licences and guarantees.
• Litigation, compliance and environmental exposure.

4. Present the opportunity without window dressing

Good presentation is not cosmetic. It connects the company’s market position, strategy, capabilities and growth plan to verifiable evidence. Weaknesses should be addressed honestly, with a remediation plan where they cannot be removed before the process begins.

A concise investment narrative should explain why the company can keep creating value under new ownership, what resources are required and where the principal risks sit.

5. Prepare the people and the process

The owner must be ready for a demanding process while continuing to run the business. Decide who will answer financial, legal and operational questions, prepare a controlled data room and establish rules for buyer contact. A fall in trading performance during the sale process can be more damaging than any presentation issue.