I run a small manufacturing business with about 12 employees, been going for 18 years. Thinking of selling up and retiring, but I keep hearing mixed things about the market. Is it really as brutal as some people say? Would appreciate hearing from anyone who's actually sold or tried to sell recently.
Business Sale
How hard is it to sell my small business in the UK right now?
Brutal might be an exaggeration, but it's certainly not easy. The days of listing with a broker and getting multiple offers within a month are long gone for most small businesses. Buyers are much more cautious now, especially with interest rates where they are.
What sector are you in? That makes a huge difference. I've been trying to sell a small engineering firm since last autumn and had ywo serious enquiries. Both fell through at due diligence.
We do precision components for the automotive sector. Long-standing contracts but obviously that sector has its own challenges right now.
The automotive supply chain is a tough sell at the moment. Buyers will worry about customer concentration and whether your contracts will survive the shift to EV. Not saying it can't be done, but you'll need to demonstrate a clear diversification strategy
Honestly the hardest part is finding a buyer at all. Plenty of tyre-kickers who want to pick your brain for free but won't put an offer in writing. Spent nine months with a broker before giving up.
What are you actually trying to sell though — the business as a going concern, or just the assets? If it's the latter, it's a lot quicker. If you want someone to take on the staff and keep the name going, that's where the complexity is.
GrimsbyPete is right about the tyre-kickers. We had three separate parties sign NDAs and request full financials, then disappear. One of them was actually a competitor just trying to see our Margins.
That's a concern. We've got a good team and I'd want them to be looked after. Sounds like I should be prepared for a long and frustrating process.
Get your accounts in order before you even think about approaching buyers. Last three years of management accounts, clean up any personal expenses running through the business, and have a clear answer for why you're selling. Any hint that you're desperate will be used against you in negotiations.
Also worth talking to a couple of brokers just to get a realistic valuation. Not the ones who promise the earth. Ask them what they've actually sold in your sector in the last two years and what multiples they achieved. If they can't answer that, walk away.
And expectt any offer to be structured with an earn-out. Buyers don't want to hand over a lump sum and watch you walk out the door. You'll probably be tied to the business for 12–24 months post-sale whether you like it or not.