Mastering the art of selling your business

Embarking on the journey to sell your business requires a deep understanding of potential buyers and strategic planning. At Crowe, we use our expertise in tax, audit, advisory and consulting to help Irish SMEs through the selling process. We're here to find the right buyer that aligns with your business and personal goals and values, making the selling process as seamless and profitable as possible.

In a lot of ways, selling a business is similar to selling your home.

The main concern is ability to execute – i.e., can they complete the deal as promised in the heads of terms? if there are a lot of caveats and hurdles to jump, be wary. Reasonable ones like due diligence, reasonable financial backing or management and owner post-deal engagement are typical, but the issues arise where these are stretched out or are contingent on other factors. Requested earn-outs for you or others should be approached with caution. The factors mentioned below, particularly around management, board and finances, should be an area of additional focus.

There are many people (hopefully!) who want to buy but there are only a few who are committed and capable.

Let's deal with capable as it is probably the most easily defined.

In advising a seller, we would undertake the following research, a good deal of which should be available publicly online or through accessing published accounts.

1. Balance sheet capability: A business has to have access to funding. Cash is an obvious one, but it should be possible to determine if they have available headroom to raise debt or equity to fund the deal.
2. Trading success: Are they running their current business well? To have the support of their financial backers they should be consistently generating profit and, most particularly, cash. If the buyer is looking to your business to prop up an ailing section of their existing business, it is a warning sign that they may not have a viable strategy.
3. Management capability: This can be more difficult to determine. Look at board and management charts if available. An overly dominant owner with limited support may be an indication that they do not have the skills to manage a corporate buying process. You can also look to their history of acquisitions and whether they were delivered successfully.
4. Advisors: It is important that the buyer is properly advised. This will ensure that the process is run professionally and that issues that arise are addressed in a considered and measured way.

In assessing commitment there are several factors to consider.

The key question is whether this acquisition is an obvious fit or does it seem more aspirational. Four things we would look for:

1. Obvious synergies in operations, back office, IT or management
2. Whether they currently trade in your market, allowing for obvious cross-selling or upselling
3. A stated strategy to grow
4. A track record in acquisitions

If these are not clear and obvious, there is a danger that the deal may not be executed.

Lastly, there are probably some personal aspects that you will want to evaluate.

1. Your business is rightly something you are very proud to have built up. Does the buyer share the same values and ambitions?
2. Your people and management team. They have most likely been key to your success, and it may be important to you that they have opportunities in the future enterprise.
3. Your time commitment. Aside from earn-out, there is typically a period of disengagement to allow for a managed handover. There may also be a need to remain deeply involved. You must weigh this against your own personal goals.
4. Restrictions. Do you have ambitions to explore other opportunities that may overlap with your existing business or that of the buyer? This would need to be carefully negotiated to ensure everyone's interests can exist in harmony.

Crowe has a team of industry experts dedicated to helping you through the business sale process. From identifying the right buyer to finalising the deal, we will guide you every step of the way. Contact us today for a confidential consultation and discover how we can help you make smart decisions today that deliver lasting value for you.