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How To Sell Your UAE Business – Do It Once, Do It Right! - Part 1

How To Sell Your UAE Business – Do It Once, Do It Right! - Part 1

31 Oct 2019
How To Sell Your UAE Business – Do It Once, Do It Right! - Part 1

Part 1 - Objectives & Viability

Is Selling the right option?

Give careful and serious consideration to your reasons for sale. You will be asked by potential buyers why you want to sell. They will need to be comfortable with your motivation and answers. Ask yourself the following:
 
What are your objectives as business owner? 
 
Do you want to realise some or all of your investment to fund retirement or pursue other business/personal interests?  Do you want an ongoing full or part time involvement with the business? Do you want to pass the business onto your children? 
 
What are your objectives for the business? 
 
Does it need new investment to grow and what does the growth look like and how can it be achieved?  Does it need new owners and/or stronger management to expand and develop? Does it need to diversify into new markets or revenue streams or consolidate its position in its current market and (if so) how and what benefit will that bring? Does it need to be restructured, why and how? Should long standing employees/management have an opportunity to take it over?
 
What do you want to sell and to whom? 
 
Do you want to sell all or a part of your ownership in the business?  Do you want to sell a specific part of the business assets or the whole undertaking? Do want to split the business and sell each part separately to different buyers? Does the business need to be restructured and/or management team strengthened or replaced prior to, or as part of, the sale? If you have multiple businesses, are any businesses and/or assets to be excluded from the sale and retained?
 
Who and what else will be affected by a sale?  
 
To what extent will it affect other shareholders, the managers/employees, and/or key customers and suppliers?  How will they react and what will they want? Are there any restrictions on the proposed sale of shares/assets/business and what is the impact and how will these be managed?
 
What will you do after the sale? 
 
Plan what your life will be like after the sale - not a critical step to selling your business, rather a building block for preparing and securing your future. If this step is overlooked you will be left wondering what to do once you no longer own and operate your business. Whether you are retiring or taking up other opportunities, you will need to plan how the sale proceeds will be spent/invested and what your next steps are going to be.
 
Is a sale realistic?
 
All businesses can be sold provided they are valued appropriately and marketed effectively, even where the business is not doing too well. The key is for the business to be ready to go to market, which means it needs be functioning correctly and, ideally, profitably. You may need to review all aspects of your business, consider the areas that need to be ‘fixed’, and go through the process of fixing all those issues before putting the business up for sale.  You can only sell your business if someone is prepared to pay for it. If you can't identify strong reasons - that can be easily substantiated - why your business would make a good acquisition, it's likely to be difficult to find a buyer.  Ask yourself the following:
 
  • Is the business healthy?  A business in trouble is difficult to sell and potential buyers are likely to wait until they can get assets at a knockdown price - although sometimes financial distress can be a motivating factor to a buyer who can see a turnaround opportunity.
  • Are the basics in place to make it attractive? Buyers like well-organised businesses with strong management.
 
Is there a good financial record?  Buyers prefer a record of smoothly increasing profits with good growth potential.
 
  • Who might buy your business and why? Can you identify potential trade buyers and a good reason why they should want to buy your business? Buying a business can be disruptive and expensive. Potential buyers may prefer to concentrate on their existing operations.
  • Is a sale to existing management possible? Consider selling to your management team.  Whilst they may only offer a modest price and/or have limited financial resources, a management buyout is usually far quicker to complete than a sale to a trade purchaser. You may prefer to pass the business onto long serving and loyal staff rather than a third party purchaser.
 
James Berry & Associates Legal Consultants has over 30 years’ experience helping business owners in UAE across all sectors achieve their exit objectives. If you are consider selling your business now or in the future, we have a team of lawyers with proven corporate/M&A experience that can assist you every step of the way. For further information on our legal services and how we work with clients please contact Neil Large and/or James Berry

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