Recently, our managing director, Phil Ellerby, shared his insights with Yorkshire Business Insider on how business owners can better prepare for a successful exit.
In the following article, Phil outlines six key questions every business owner should ask themselves when preparing to sell their business, from understanding timelines and valuation to strengthening financial performance and reducing risk for potential buyers.
- How soon are you hoping to sell your business?
It’s fundamental to understand your timelines here. You can’t wake up one morning and want to sell your business tomorrow, because you won’t get maximum value for it. The first question to ask yourself is what do you need to exit? Personal goals are important here. What does life after the business look like, and how much money do you actually need to fund it? Once you know that number, you can map the gap between today’s value and your target. Even if you’re not ready to sell, preparation gives you options and control.
- Are your financials in the right place?
Buyers don’t buy promises – they buy proof. They want to see consistent profitability, positive cashflow, and stable revenue. Clear management accounts, forecasts and performance data should already exist, not be scrambled together during due diligence. Strong financial control demonstrates credibility and reduces risk in a buyer’s eyes. If you can’t clearly explain your numbers and trends, neither can they. Financial clarity is often the difference between a smooth sale and a discounted offer.
- Could your business operate without you day-to-day?
Buyers are paying for continuity, not dependence, and what they’re looking for is continuity without you. That means a capable leadership team, documented processes, and decision-making that doesn’t just rely on one person. Over time, you should make yourself less central, not more. A company that runs smoothly without you is both more valuable and less risky, and ultimately far more attractive to potential acquirers.
- Would your customers and suppliers be easily transferable to a new owner?
Relationships tied solely to you can quickly disappear after a sale. If customers buy from you because you’re their “go-to person”, or suppliers give preferential terms based on personal rapport, that value may walk out the door when you do. Strong businesses embed relationships across teams, not individuals. Contracts, systems and shared ownership of accounts all help protect goodwill and make the transition seamless for a new owner.
- What is your business really worth?
Valuation isn’t guesswork or a made-up multiple of ‘10x profit’ like they tell you on the internet. It’s based on the fundamentals of recurring income, growth potential, margins, intellectual property, and the strength of your brand. Different sectors are valued in different ways, so understanding what drives value in your market is essential. A regular, professional valuation keeps you grounded in reality and highlights what to improve. Without it, you risk aiming for a number that simply isn’t achievable. Everything links back to financial performance – you’ve got to map out the journey of where you need to be.
- Are there potential risks or deal breakers?
Small issues can derail a deal late in the process. Legal disputes, tax exposure, messy shareholder agreements or poor governance all create uncertainty and can reduce your sale price. It’s also worth thinking about the type of buyer you want. Do you care about the legacy of the business, its culture and your team, or is maximising cash the priority? Most deals involve earn-outs, so the business still needs to perform after you leave. Planning ahead protects both value and peace of mind.
