How to Prepare Your Business for an Off-Market Sale

On the open market, a weak first impression is diluted across many enquirers. In a targeted search, the buyer list is short and carefully chosen. Losing a well-matched buyer because figures did not reconcile, or because an obvious risk was not explained, is expensive.

Confidentiality adds a second reason. Every round of questions and answers involves sharing more. Having the information ready in advance keeps the number of exchanges, and the number of people involved inside the business, as small as possible.

Buyers who are approached directly expect a seller who means it. Before outreach begins, be honest with yourself about three things: that you would accept a sensible offer if one arrived, that you can give the process time alongside running the business, and that your personal plans after a sale are at least broadly clear.

If the honest answer is “not yet”, it is better to prepare quietly and approach buyers later than to approach them early and withdraw.

A buyer will start with the numbers. You will usually need the last two years of full accounts, up-to-date management accounts and a clear picture of current-year trading.

The figures must agree with each other. If management accounts show a different profit from the filed accounts, know why. If this year is trading differently from last, be ready to explain the reason in a sentence.

• Full accounts for the last two years.
• Management accounts to a recent month end.
• Current-year trading against the same period last year.
• A short note explaining one-off income or costs.

Buyers are interested in the profit the business can be expected to keep making under new ownership, not just the figure in the last set of accounts. That usually means adjusting for one-off items and for costs that relate to you personally rather than to running the business.

Be conservative. Adjustments that a buyer will not accept damage credibility early. A short, well-evidenced list is stronger than a long, optimistic one.

A credible buyer will look for the reasons the business could be worth less than it appears. It is better to identify these yourself, before outreach, than to have them raised in a first meeting.

• Customer concentration — how much revenue depends on your largest few customers.
• Contracts — whether key contracts can be ended on short notice or on a change of ownership.
• Recurring revenue — how much income repeats without being resold each year.
• Key staff — who would be hard to replace, and whether they are likely to stay.
• Premises — lease length and any terms triggered by a sale.

Most buyers of an established business want to know it will continue without you in the middle of everything. You do not need to step back completely before a sale, but it helps to know which relationships, decisions and knowledge sit only with you.

Where something can be shared with a manager or written down without unsettling the business, it is usually worth doing before buyers are approached. Where it cannot, be ready to explain how a handover would work.

Once a buyer has signed an NDA and you have approved them, they will typically ask for a breakdown of revenue by customer and service, staff structure, key contracts and premises details. Having these ready shortens the time between first interest and a meeting.

This is not full due diligence. It is the information a serious buyer needs to decide whether to spend time and money going further.

Decide in advance which facts can be shared before an NDA and which must wait. The anonymous stage normally covers sector, a broad region, approximate scale shown in ranges, and why the business may fit a particular buyer.

Anything that would let someone in your sector recognise the business — a town, a unique service, a named contract, an exact headcount — belongs to the later, identified stage, released only to buyers you have approved.

Agree before outreach which companies must never be contacted. Common examples are a close local competitor, a major customer, a key supplier or a business with which you have a difficult history.

Writing this down early prevents it being decided under pressure later, and means the buyer list is screened before anyone is approached.

• Why are you selling, and why now?
• What would happen to the business if you stepped away?
• Which customers matter most, and how secure are they?
• What would you do with the business if you were staying?
• What role, if any, do you want after a sale?

Short, consistent answers matter more than polished ones. The same answer should come out of every conversation.

Know what a sensible outcome looks like for you: a realistic value range, the timing you can live with, your role afterwards and anything that matters beyond price, such as staff or the business name. Our guide to value before buyer outreach covers the price side in more detail.

• Accounts and management figures agree, with differences explained.
• Maintainable earnings worked out conservatively.
• Main commercial risks identified, with a short explanation for each.
• Owner-only knowledge and relationships understood.
• Information buyers will ask for is ready to release after approval.
• Anonymous and identifying information separated.
• Do-not-approach list agreed.
• Your own expectations written down.