October 30th, 2012 / Insight posted in

Best way to sell family company

JB writes: I run a family business that was established in 1895 and specialises in furniture upholstery. It also owns the freehold to the premises and this includes a residential apartment. Owing to ill health, I need to retire, but there is no family member who can continue with the business. What is the best way to sell the firm? I have found that normal business agents do not understand the special craftsmanship in our business.

Selling a business so the owners can retire is a common occurrence among private companies and is often triggered by a change in circumstances or ill health, writes Marc Fecher, a partner at Kingston Smith LLP. You will need to consider how much the business is worth; who will buy it; how long the process will take; and whether there are any other options that might deliver a better result.

The sales process will be determined by the size and nature of the business. As the owner, you will wish to maximise the amount of money you receive, while a purchaser will want the opposite but will look to increase the value of the business as rapidly as possible once he has taken it over.

The task of buying and selling a business requires specialist professional knowledge and expertise, so you need to engage someone who will understand your business and its unique values.

A typical sales process begins with a strategic review. The outcome of this usually determines whether you should sell the freehold with the trading business, for example. It also determines the key management strengths and financial performance, all of which will have an impact on the price that can be achieved.

A specialist corporate finance adviser will typically have access to the best potential buyers of a business and will be able to tailor a confidential process for a successful sale.