Paul Williamson

Business owners approaching retirement will need to decide on the future of their business – to either draw the business to a close or find a successor to replace them at the helm. Making this decision well in advance of the planned retirement date is imperative as it will shape financial planning decisions and provide ample time to choose a successor.

If there’s no pre-determined candidate to take the seat at the head of the table, set the wheels in motion by finding a suitable replacement that is the right fit for the business. If selling the business is the chosen route, turn to an experienced business transfer agent for step-by-step advice on how to find a business buyer in Scotland or beyond.

How to start planning a business sale

When starting the business sale process, the preparation stage is essential. This includes getting the business sale-ready and collating all the information and documentation required to support the sale process under the wing of a professional business sale expert.

Appointing an advisor - The first step to selling a business is seeking advice from a professional advisor with real-life experience and unique insights, such as a business transfer agent, also known as a business broker, or business sale advisor. The benefits of using an experienced business sale expert include being able to tap into a vast network of buyers, access to an unlimited knowledge base and data on how much similar businesses sold for.

When choosing a business transfer agent and considering whether a fee is reasonable, check their track record and assess their reputation. Here’s a checklist from the Selling My Business team of business brokers to support business owners looking to appoint an advisor to sell a business.

• How do clients rate their experience?
• What’s the success rate?
• What sector experience do they have?
• How will they market to potential buyers?
• Do they charge upfront?
• What services are included and excluded?
• Is there a money-back guarantee?

When engaging with a business broker to plan a retirement sale, discuss the retirement timeline to ensure that the sale of the business matches up with the retirement date, including any handover support that may be required post-sale.

Valuing a business - How much the business can generate from the sale will play a major factor in planning retirement finances. A business valuation calculates how much the business is worth, the market value will then be used as a starting point to determine the sale price.

Financial records – Accounting and financial records must be brought up to date so the financial position of the business can be established accurately, and potential buyers can judge the business based on its latest financial position. From company cash flow and company liabilities to company assets, accounting records staple the financial position of the business and are essential when valuing a business.

Advertising collateral – To advertise a business for sale, a business broker will work closely with the seller to build a business profile which will then be used to market the business across a range of platforms, including online and offline marketplaces. A typical business profile includes professional imagery, brief background, a valuation report, operational information, turnover and net profit.

When planning to sell a business ahead of retirement, the timing is crucial. A retirement business sale must be planned so the business can be prepared, and a buyer secured ahead of the planned date of retirement.

When to start planning a retirement business sale

Planning a business sale can give ample time for securing a buyer, preparing the business for sale, tightening company operations, allowing time for any hiccups to play out that may bring the retirement date forward, negotiating a contract and sealing the deal ahead of retirement.

There’s no fixed answer for how early a business seller should start preparing a business for sale, although this can range from months to years. The longer you have, the greater the flexibility and as such, businesses often kickstart preparations several years ahead of the planned retirement date to give time to prepare the business for sale and find a suitable buyer.