Selling your Business. By Richard T Lishman

Selling your business

By Richard T Lishman Managing Director of the 4dentists Group of companies

Richard Lishman, award-winning Founder of The IFA’s – a specialist firm of Independent Financial Advisers that provides guidance and advice for some of the wealthiest individuals and businesses in the UK and around the globe – heads this series of editorials for lab technicians.

DENTAL TECHNOLOGY STUDENT

(Part 8 of 10)

Previously, our character, Bridget Crown, expanded her business empire by opening an additional laboratory. Now, as she heads towards the end of her career, Bridget has decided she wants to sell her company.

From a financial standpoint, Bridget will have a lot to consider at this juncture, and the practicalities and what can be achieved with the sale will be dependent on a number of factors. So, what sort of aspects should Bridget be bearing in mind?

Start with expectations

To begin with, anyone thinking of selling their business should examine their expectations and what this will mean for them. Does Bridget want to continue working at her laboratory but just have less responsibility? What sort of cash sum is Bridget hoping for? Does she have a set timescale in which she wants the business to sell?

These questions are a good starting block, as the sale process will undoubtedly be guided by Bridget’s thoughts of the future and what she hopes to achieve. Ok, so let’s imagine Bridget does want to keep working, and that she wants to maximise the price she can get for her business rather than selling quickly for convenience.

A business valuation

Now that Bridget has her goals, she should begin with a business valuation. There are quite a few available avenues here, so she will need to look into the options and choose a valuation service that is best suited to the nature of her business. This is a great starting point and will give Bridget an educated estimate on business worth depending on assets, profitability and even reputation. It can also reveal any problems with her current business model and generate discussion about which areas of her company need improvement to make it a more appealing prospect for potential buyers.

Preparing a business for sale

Selling a business can be a complex process. Bridget will not only need to bear in mind the immediate ramifications of selling it, but also the long-term impact that this will have on her staff and her finances moving forward. Plus, Bridget has opted to continue working, so she needs to find a buyer that will allow her to remain post sale.

As Bridget is keen to maximise the sale price for her business, there are various steps she can take to make it as appealing to buyers as possible. For example, ensuring that her team is strong and the corporate structure is sound will instantly help her business be more attractive to potential buyers. This will mean that they won’t have to deal with changing the company structure too much or look to hire new workers etc. unless they want to.

She should also make sure that everything is in good condition. Any broken equipment ought to be fixed, any minor repairs to the business premises should be carried out and everything should be in good working order. Additionally, any outstanding disputes or questions from suppliers or the dentists that Bridget worked with should be resolved and all contracts and leases should be organised and accessible so that the new owners can effectively continue business as normal if they choose. There’s also a lot to be said for making sure that all accounts are up-to-date so that any potential buyers receive a clear picture of what they are investing in.

Taxes and selling

Unfortunately, one aspect of selling a business is navigating the taxes that this decision entails. Any profit made on a business sale that exceeds the tax-free allowance will be subject to Capital Gains Tax. There are certain reliefs available, though.

If Bridget has owned the business as a sole trader, she should be eligible for Business Asset Disposal Relief – a discounted rate of 10% Capital Gains Tax. Gift Hold-Over Relief may also be an option if Bridget wants to give away business assets or sell shares for less than they are worth to the new buyer. This way, Bridget could transfer the responsibility of the Capital Gains Tax to the buyer and avoid being taxed herself. This is never as easy as it seems, however, and it’s likely there will still money that Bridget would be taxed on if she takes this route.

Advice is essential

Selling a business is a big decision, and this article only touches on some of the avenues that Bridget will have to explore in order to make a sale that works best for her. It’s vital that anyone looking to sell their business receives tailored advice such as that given by the expert team at The IFA’s. This way, you can navigate the taxes and other expenditures that selling a business involves as well as receive truly bespoke advice that will help you to reach your sale goals.

For more information, please call 0845 345 5060 or 0754 336 8478 or visit www.theifas.com