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The Best Way to Sell-Up: Don't Use an Accountant

Posted On - 02/12/2016 08:14:42

Pension planning is hardly inspiring, but ignore it and you'll end up destituteSeven weeks on and we're still going on about "How to Create a Business Worth Buying". Perhaps if we sold businesses it'd make sense. We don't! So why are we going on? What's the beef?

Come on, see the big-picture. These posts haven't been about getting you to sell. They've not been about trying to teach you how. We've done them because one day you'll stop work. And when you do you'll find the state pension barely enough to live on.

Your business can't be just a paycheck - it has to be a nest-egg. Get it?

"Start with the end in mind"... on of Stephen Covey's "7 Habits of Highly Effective People". It's a long-standing best seller and well worth a read. Unlike pension planning which never has or will make a block-buster. Not only is it uninspiring, it's dull, dry, turgid, boring and tedious. And to cap it all it's years away. So it's completely irrelevant! 

Is it! Really?

Maybe this'll change your mind. As a rough rule-of-thumb you need to save 20 times what you want as retirement income. So £20,000 a year means savings of around £400,000. £30,000: £600,000! That's quite a lot of dough.

Still uninspired? Or a bit more interested now? But don't get panicked or go into denial. Yes, you may feel daunted. But "Yes" you've also got the answer. That's if you've a business worth buying.

Full valet

Sell your car and you'll present it as best you can - you want the best price. So you'll wash and polish it. Vacuum and clean it out. You'll have the service history and copies of all invoices for work and parts ready to show. It all helps convince buyers the car's been loved and cared for. That it's worth the price and a good buy.

The same is true for your business. This series has been all about how to prep your business for sale – how to ‘valet' it and show off its ‘service history' and ‘invoices'. We've discussed the need for customers and sales data, evidence management information is being used, proof of contracts and being a preferred supplier, as well as clear indications your business is cash-generative. We've also looked at growth potential and owner dependence. All these add value and help make yours a business worth buying.

But as much as they make you a business worth buying there's one thing they don't. As much as they make you something others want they don't help you get the best price. In other words while they help get your business ready for sale they don't actually sell it. That's what this post is all about.


Buyers can value the same thing very differently. Take your business. Let's assume you offer it for sale and get two replies. One from another computer repair business like you, the other from a business that repairs white goods like washing machines and fridges.

Now you'd be forgiven for expecting the offer from the computer repair business to be better – they know the business, it's their game, they know what to pitch. But it isn't: the offer from the other is much better.

Has the white goods business made a mistake? Is it because they don't know what they're doing? Are they just out of their depth? Nope. Not a bit. You see to them your business is worth far more. Because they see synergies.

One plus one equals four

Sums! But haven't we got this one wrong? Not if you're thinking synergies. As a simple explaination let's say you've 100 customers. The computer repair business making and offer has 100 too. If it bought you it'd end up with 200. So when it does its business doubles in size. That's the opportunity they see. That's what's behind their bid. [Rocket science this – bear with us!]

Now, the white goods business also has 100 customers. And if they bought you they'd end up with 200 customers as well. So double the business - it's just half would want one type of repair and half the other. But isn't this going backwards? Sure, they've more customers but they've made things more complicated - much more than would be for the computer repair business.

Well, if you see things like this you're missing one huge trick. People don't just have computers or white goods, most have both. So each customer base can be cross-sold to. In other words instead of selling 100 of each type of repair, there's the chance of 200. And instead of merely doubling their business the white goods repairer could well quadruple it! Now see why they offered a higher price?

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