28 SELLING A BUSINESS


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EXIT STRATEGIES AND BUYER ROUTES by Peter Hogan


Operations director, Commercial Road


While running your business day-to- day, your exit strategy might not be at the forefront of your mind.


But planning in advance allows you to choose how you want to leave and to prepare the business accordingly.


If your main motivation is making a profit, retiring or investing in a new venture, selling your business is the best route. Then you need to find the right buyer. The more interest that is generated the better the sale price.


Typical buyer routes as follows:


Trade Buyers A trade buyer already has a business, however the idea of combining two businesses is popular and these types of buyers are the most common bidders.


A trade buyer will look at the worth of the company, and is therefore likely to pay a premium price.


T. 0808 147 1091 E. enquiries@commercialroad.com


Acquisition companies An acquisition company can be an individual or a company of around five or more individuals at director


level. They want to purchase an asset, so a self-sufficient business can be more attractive.


Private Equity These are high net worth individuals or companies that excel at putting strong, highly motivated executive teams together to maximise everything they can using the company assets. They can outbid trade buyers and give sellers more options to choose from particularly when it comes to deal structures.


EOT


An EOT is a trust which enables a company to become owned by its employees. It is tax free to a seller, with no capital gains tax and guaranteed full market value for your shares.


The market value is based on independent assessment.


Contact us at Commercial Road for a no fee, no obligation initial consultation.


IS IT POSSIBLE TO SELL AN INSOLVENT BUSINESS? by Natalie Hughes


INSOLVENCY WE


Practical insolvency advice for directors & business owners


Director, Simply Corporate


If a business is experiencing financial difficulties and is in distress, directors may believe there is little hope of selling it.


However, insolvent businesses are regularly purchased by third parties such as entrepreneurs and turnaround specialists, particularly if a company has a history of profitability.


There are strict rules that must be followed when selling an insolvent business to guarantee the best return for company creditors and specialist advice from an Insolvency Practitioner is always recommended.


How could a director sell a business under these conditions?


Pre pack sale 01282 222420 www.simplycorporate.co.uk


This is an insolvency procedure that aims to market the company assets for sale. However, the administrator must be able to demonstrate this process provides the best outcome for creditors.


Quite often the existing directors may purchase the assets of the failing business and use these to form a new company with little job loss and interruption of trade.


Sale on the open market


If working capital allows, the administrator may decide to continue trading a company in the short-term whilst placing it for sale on the open market.


This may achieve a higher sale price than a pre pack given that the goodwill is maintained.


What type of sale – shares or assets?


A buyer may be interested in purchasing the shares of a company, or only the assets. If a company has been profitable in the past, then by purchasing only the shares, and having a solid turnaround strategy, a buyer may be able to offset losses against future anticipated profits.


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