Frequently asked questions
Frequently asked questions - Selling Your Business
Please find below the answers to the most frequent questions we get asked. If there is any point you can't see an answer to please contact us and we'll be delighted to talk with you and address any queries you might have.
What Happens When I Contact You?
You will be put through to one of our experienced team who will initially engage you in an informal but confidential discussion over the telephone. This will give us the opportunity to appraise your situation, understand your requirements and make sure you completely identify with all the procedures when looking to sell your business.
When is the best time to sell my business?
Usually the best time to sell your business is when you don't have to or when it is doing well. The decision is not one which should be taken lightly, and you should groom your key staff and plan well in advance. Haphazardly going on the market can seriously limit your chances of sales success and the amount of money you receive. It is possible to sell most businesses if prepared, structured and priced correctly. If you leave it too late in the business cycle of your life-plans you could end up having to "give it away".
Why use a business broker?
Using a broker means that you will benefit from an experienced professional who understands what it takes to make a deal happen – controlling the process from start to completion. You have to remember that the opposite party, whether you are the vendor or purchaser, is probably using professional assistance and the biggest advantage they could have over you is to know that you are working alone. We recognise you may be a seasoned negotiator but it might take quite a bit to convince a counterpart that you have the relevant expertise and they will use it for their gain where at all possible.
A good broker should be able to find buyers beyond the obvious - buyers you couldn't find on your own.
The broker, with a database of qualified buyers, will be able to produce all the documentation necessary to show your business in its best light. They should be able to add value, maximising the sale price so that the benefits far outweigh any fees involved.
Selling a business is a complex and time-consuming process. It is very easy to underestimate the process and think you can do it all. You wouldn’t be the first or last to take your eye off the ball while trying to sell, letting your business slide - weakening your sales proposition. You can even make your business unsaleable. Don’t make this mistake and regret it ever after.
Not convinced? One of the best reasons to use a broker is to act as a buffer between you and the purchaser. There will certainly be times when you’ll want to adopt a tough negotiating position. A broker makes this possible without antagonising the buyer. Remember, you might have to work with a new owner during a handover.
If you need only one reason, this is it. "Sellers receive a better price for their business when they work with an experienced professional broker"
How much is my business worth?
A well known rule of thumb is ’as much as a willing buyer is prepared to pay for and a willing seller is prepared to sell for.’ That said, business value can be determined by many factors. These include cash flow, sustainable profit, asset value, financial history, location, competition, customer base, management and the economy. Longstanding personal involvement in a business especially when built from scratch, often clouds judgment and obscures commercial reality. Only the marketplace can decide its true value. Unrealistic vendor expectations are the main reason for the failure of most business sales. A buyer will simply dismiss your business if it is not priced reasonably. A broker works hard to conclude a deal and has the advantage that they are not emotionally involved.
At Kensington we are committed to selling businesses and as a result will value businesses on the basis of what the market is likely to pay. Just give us a call or send an e-mail for a non-obligatory, free and confidential discussion.
How long does it take to sell?
This depends on the market conditions and what is for sale. However, our average business sale takes between three to nine months from start to finish, although you should allow a full year. In many cases we are talking to the eventual purchaser within the first months.
How do you keep the sale of my business confidential?
One of your main worries you might have is the confidential aspect and we entirely understand your need to remain anonymous, so that neither your staff, customers, suppliers nor competitors will be made aware of the arrangement until you can introduce them to all the beneficial aspects of the deal. We are acutely aware of the sensitive nature of buying and selling professional businesses and will at all times endeavour to ensure the highest level of confidentiality and discretion and this includes making all necessary parties, including ourselves sign a up to a confidentiality agreement. No confidential details of any business are ever given to potential purchasers without a client's consent.
What are the tax implications of selling?
This depends if you are a sole trader, partnership or limited company. Some form of tax is inevitable. It is vital you get advice on the tax regime applicable to your circumstances. The question is not really how much your business will sell for, but how much of it you can keep. The right tax advice can have a big impact on how your deal is structured and ultimately how much you have to pay the Chancellor of the Exchequer.
At Kensington by combining our sales & marketing expertise together with our group specialist tax division and accountancy knowledge, we are in a prime position to offer you the best advice possible.
How will I know what's going on?
Working closely with you, we regularly update you at every stage of the process. No details about your business are ever given out without your express permission. You control who we talk to and what we tell them. We are accountable to you at every step of the way.
How much time will I have to put into the process?
The main advantage of using a broker is that you can continue running your business while we independently try and seek an acquirer. We will contact you to update you on any aspects but we can always arrange to contact you out of normal business hours if this would suit you better. We handle virtually all of the time-consuming or potentially intrusive elements of the selling process on your behalf.
What are your fees?
Our fees are predominantly contingent - in other words, we don't get paid until we produce a result for you. We are remunerated on a percentage of the final sale price. The only fees you may have to pay, when we agree to proceed in sourcing a purchaser for you, are marketing fees.
All our fees are negotiable.
What about solicitors?
A solicitor's job is to draw up the definitive sale and purchase contract once a deal is agreed. It is absolutely vital that you work with a solicitor whose main field of expertise is corporate law - principally the buying and selling of businesses. Again we can introduce you and work together with you to find the most suitable and professional solicitor.
We look forward to working with you and achieving beneficial outcomes for all parties and we want you to know that we will always be available for the slightest query and you are always welcome to contact us at any time, evenings included.