If you’re used to working with your client purely from an accountancy perspective – compiling and submitting their end-of-year HMRC return, for example, or advising on payroll and tax matters – you may feel awkward about offering additional help if they decide to sell their business at some point.
However, most clients will appreciate being able to turn to a trusted professional for advice on a range of issues that are likely to arise before and during the sale process. If you can help a client to pull together all the paperwork they’ll need, draw up a sale prospectus and even advise them on how to arrive at a fair asking price, you’ll have shown yourself to be a great asset at what can be one of the most stressful times in any business owner’s life.
Valuing a Business
Anyone can take a stab at valuing a business, but your client may lack the objectivity to land on a fair price that’s the right level for the market. Ask your client what they want to gain from the sale – remember, a good return on their investment may be only one of several desired outcomes – and go from there. There are lots of formulae available to help formulate a ballpark price, depending on the type of business, its niche and assets: you could use a multiple of profits or an asset valuation as a starting point.
As an accountant, you’ll have the expertise to fine-tune a price and will be able to guide your client by providing a comprehensive evaluation of any assets and liabilities and asking them to consider what intangibles – website for instance – will be included in the sale. You should also be able to use your knowledge of your client’s past earnings, cash flow and balance sheets to come up with an accurate sale value. Are there any issues that could impact the saleability or price of the business? Your client will appreciate a professional sounding board for their concerns.
Compiling the Necessary Paperwork
However strong a buyer’s gut feeling is about a business proposition, they’ll always be on the lookout for evidence that substantiates the asking price – or a good reason to make a low offer. This is where any accountant worth their salt can assist the smooth progress of a sale. Your client will need to bring all their paperwork up to scratch – including three to five years of accounts, as well as any leases, contracts, employment records, licences and H&S documentation.
If you can work with your client in the early days of the selling process – preferably before the first enquiry – you’ll be able to set the stage for the due diligence that will be initiated further down the line. It’s also a good idea to offer prompt advice about how your client can best structure their sale to minimise tax liability.
Sealing the Deal
Whether your client’s business is bought by a first-time entrepreneur or acquired by a competitor, the sale itself can take many forms, including the transfer of assets such as intellectual property, buildings and equipment or company shares, for example. Although a solicitor will lead the legal process, you’ll likely be involved with drawing up a prospectus, outlining the agreement and proposing timescales for the sale’s completion. You may even be asked to investigate the buyer’s credentials to determine whether they’re in a position to proceed with the sale.
Your client will be relying on you to outline the benefits and downsides of the various transfer options, so they can get the best deal. You should also be in a good position to advise on the tax implications of making any last-minute adjustments to the sale price or payment arrangements. A solid client-accountant relationship will ensure smooth progress and a good result for everyone.