Preparing to sell your business
Over the next few years we’re likely to see a number of sales and mergers among mainstream travel brands, as businesses look to cut costs. The trick is getting your business financials in order before the rest of the crowd, ready to face thorough investigation by any prospective buyer. By following the steps in the checklist below you can maximise the appeal of your company and therefore your return.
- Get an independent valuation of your business to establish a base price, and adjust your own expectations accordingly
- Seek tax advice early to outline likely tax liabilities resulting from the sale, and ways in which these can be reduced. Entrepreneurs Relief, for example, reduces the Capital Gains Tax on business assets
- Look to introduce or strengthen an executive management team so the business is not over-reliant on you personally. Consider encouraging these staff to stay long-term with share options such as tax advantaged Enterprise Management Incentives
- Ensure strong financial accounting controls are in place and all records up-to-date so that a buyer’s Due Diligence audit can be undertaken smoothly
- Review and remove non-core assets that are not used in your main trade such as properties, reduce or eliminate low margin products, identify cost savings and reduce risks within the business
- Check all legal agreements and contracts are readily available for review
- Prepare an operations and processes manual that shows all the functions of the business; how things are done, the major customers and suppliers, samples of advertising, and any other information that would help a new owner
- Be prepared to work as a consultant following the sale to ensure a smooth transition
Now you are ready to put your business on the market, hire a corporate finance advisor with experience of selling a travel company of the same size. They will help the sale go through for the best possible price and with minimal disruption by supporting you in these key steps;
- Prepare a sales memorandum explaining the principals of your business as well as its historical and projected financial performance, then distribute it to potential buyers under a confidentiality agreement
- Seek initial offers and whittle down a list of potential buyers
- Invite best and final offers before proceeding to a non-binding outline of the deal known as heads of terms
- Grant the buyer an exclusivity period during which due diligence can be carried out, and manage issues arising from it
- Instruct lawyers to draft the Sale and Purchase Agreement and manage through to completion
Many factors will influence the amount you receive for your business, including timing and the ability of a competitor to enter the market. By planning your exit at the right point on your company’s growth curve, and hiring an experienced advisor, you have a powerful bargaining weapon.
Contact us
For further information, please contact a member of the Travel & Tourism sector group or email your enquiry.
