Choosing the right buyer for a very successful small business? Inspiration needed.

[XingMing]

DH has created from nothing a successful business but wants to retire one day, in a year or a few (at normal retirement age). Profitable, cash generating, (probably not scalable) but very specialist sector (engineering) and not consumer oriented. How does the entrepreneur retire while keeping a hand-picked team happy, productive to move forward together? No obvious natural succession plan has emerged. Sell outright, or employee share ownership?

Never easy to sell a small business, especially one that is dependent upon it's owner running it. That's because there isn't really a "market" for them. Often the values involved simply don't justify the costs of accountants, solicitors etc doing the necessary due diligence and buying/selling process which is time intensive and therefore expensive. Some types of trade/profession do have a market and usually have specialist selling agents - they often advertise in trade/professional journals.

All I can say is don't trust the National general business broker/selling agents. I won't name names. But their business model is to make promises that they have potential buyers on their books just looking for a business like yours. They give you very high valuations for your business. They then charge up-front fees for marketing/advertising etc (non refundable if they don't sell). They sucker you in to engaging them and then nothing happens. Maybe 1 or 2 people show an interest. After a few months, they suggest a price reduction, but then want another up-front fee to cover more marketing, different advertising, etc. They make their profit by charging the up front fees - if the do manage to sell a business and take their selling fee, it's just icing on the cake for them.

Please don't fall for it. Take advice from your accountant as to a realistic valuation. Take advice from a local business sales agent as to likelihood of sale and their take on value. (Both values are highly likely to be similar and an awful lot less than the National firms!!, so more realistic.)

Talk to similar businesses directly to see if they may be interested in buying you out. If you don't want to come out in the open, get a firm (accountants, solicitors, etc) to make contact with any particular firm you may feel is interested to provide anonymised data etc and then a confidential agreement before you come out.

Depends on 'value' of business. We sold business last year and used an M&A consultancy they were £££ but worth it in terms of the deal we eventually got.

Was pretty stressful though and we'd worked towards it for several years