The two main things I focus on when my clients want to sell their business

I have 4 clients at the minute who are looking to sell their businesses over the next few years. Although they’re in different industries with different nuances, financials and multipliers, here are the two main things I’m focusing on with each one.

1. Make as much money as possible.
Simple. The more you make bottom line (profit), the more you get in a sale. However, this needs to be the focus for around 3 to 5 years before you sell, as generally buyer will look at a multiplier of EBITDA (earnings before interest, tax, depreciation and amortisation, essentially, net profit plus all the ‘accounting magic’ numbers) over a 3 year period. This means investing in areas that will make more money over a 3 year period and cutting out everything that won’t, or isn’t absolutely imperative to the business. It means cutting out any and all weak links that are holding the business back from making progress.
It doesn’t mean ‘just sell more’, because if you’re not making money on the sales you currently have, you’re unlikely to make money on more sales because all that happens is the numbers (and pain) get bigger. The key is to sell more, more profitably.

2. Make the business owner redundant.
If you don’t want to become an employee after building your business and selling it for millions of pounds, you are going to want to become redundant. A business which runs itself, with staff already in place to take over is worth a hell of a lot more than a business which is still run by the owner, with everything in their heads, and it all falls over when they’re not there. Having the right staff in place, having systems and processes in place, having contingencies in place so that, to use a phrase I use often ‘anyone can get hit by a bus and it still runs’ makes both scaling and selling a business a whole load easier, and more valuable. The idea is to get to the point that the business owner can take a 6 month holiday and the business will still be successful when they come back. This is not a quick job, it can take years to achieve, so if you’re looking to sell your business at any point in the future, now is the time to start thinking about it.

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