Approaching retirement – how to dispose of a business

If you’re approaching retirement, it’s in your best interests to plan the sale of your business early if this is your chosen route. The decision to sell upon retirement will shape every detail of your life as you prepare for the next chapter – retirement, and part ways from the role of business owner that has demanded your physical, mental, and financial efforts since the inception of your company.

There are many reasons why business owners may choose to sell a business before they retire; to reduce managerial responsibilities, conclude a career, release cash to fund retirement, or because the family line has come to an end.

There are many factors that you’ll need to consider when selling a business to retire, including appointing legal professionals, including a business broker and commercial legal expert, arranging a business valuation, and preparing your business for the sale process. The average time it takes to sell a business is between 9 to 12 months, so it’s instrumental that you begin preparations ahead of your planned retirement.

Keith Tully, a partner at Real Business Rescue, runs through how to start business sale planning ahead of your retirement and where to start when appointing professional help.

How to dispose of a business before retirement

If you’re looking to sell a business before you retire, you need to understand the different stages of the business sale process.

Appoint professional advisors

– Business transfer agent

When you embark on the business sale process, you will need to decide what route to take, either to appoint a professional business transfer agent, also commonly referred to as a business broker, or pursue your goal independently, although this route is often suited to individuals with prior experience selling a business or working in a related field.

The benefit of appointing a professional advisor includes step-by-step guidance from the get–go, and throughout the stages of valuing a business, producing marketing collateral, conversing with buyers, and completing the sale. Experienced business transfer agents will likely have access to a pool of potential buyers which can help increase exposure to your business.

Commercial legal expert

You will need to seek advice from a commercial solicitor/financial advisor to ensure that your deal is legally sound, geared to a tax advantage and structured to maximise returns.

Value a business – what is the market value?

To kickstart the sale process, you need to calculate how much your business is worth by arranging a business valuation. Valuing your business is key to setting an accurate sale price that reflects the market value and has the potential to generate reasonable returns. Your valuation report will pinpoint what company assets hold a notable value which is a key selling point.

If you work closely with a financial advisor specialising in retirement planning, they may advise you on how to best structure a sale to set you up for retired life. Your business transfer agent, sometimes also a business valuer, will guide you through your valuation report.

Advertise your business for sale

To advertise your business to potential buyers, your business transfer agent will produce marketing collateral for entry on online marketplaces and distribute it to vast databases of registered buyers. A profile of your business will be produced which will provide business specifications, property features and professional imagery.

Your business transfer agent will prepare an information memorandum which is an advertorial of your business that will likely be placed on multiple platforms. Using expert support can help attract buyers across the country with a solid interest in your field and the appetite to buy a business.

Secure offer and perform due diligence checks

Once you attract the interest of suitable buyers and receive serious offers, you will need to decide how much flexibility you wish to grant when negotiating a deal. When you decide to accept an offer, you will need to perform due diligence checks.

Due diligence checks involve confirming the identity of the potential buyer, reviewing their financial status, performing anti-money laundering checks and requesting proof of funds which is when the services of a solicitor or legal expert will be required.

Complete sale

A business sale will often take place well ahead of the planned retirement date in case of unexpected delays, or the deal falls through due to unforeseeable circumstances. If you agree to deliver a practical in-person handover or continue to be employed by the business in a consultant capacity post-sale, you may choose to factor in this time before you enter retirement.

Selling a business at retirement must be carefully planned to ensure that you can find a buyer before your planned retirement date. You can help achieve this by working with business transfer agents that have proven experience in selling businesses in your field which is key to completing a seamless sale.