How To Sell Your UAE Business – Do It Once, Do It Right! - Part 2

11 Nov 2019

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

Part 2 – When To Sell

Selling at the right time can have a significant impact on the price you get for your business. You should plan well ahead so that you can pick the best moment rather than being rushed into a quick sale.

• When times are good:  Timing will depend on your personal motivations and objectives but an ideal starting point is when your business is doing well and you are not desperate for a sale. 
• Financial performance: Aim to sell when profits are increasing and look likely to grow further. Consider the impact of sales cycles or seasonal fluctuations in your business - you might have fuller order books at a particular time of year.

• Economic considerations: The general state of the economy - and your sector in particular - can have an effect. It's easier for a trade buyer to fund a purchase when interest rates are low, and banks are keen to lend. 

• Attitude and approach: You need to be in the right frame of mind and be 100% focused on the sale. It will be the culmination of years of hard work, a complex process, and emotionally challenging especially when you have still have to keep working to keep the business fully operational at the same time as the sale proceeds. Putting your business up for sale can’t be a passing fancy.  You need to be serious about selling, have the right attitude to it, and be committed to following it through to its completion.  You need to have the right attitude to the sale transaction process as well. The buy side is not interested in sellers with a ‘we’ve run out of steam… we don’t know what to do with it… we think someone else can do a better job’ attitude.  Throughout the sale process, you will need to demonstrate that you are flexible and co-operative. A buyer will expect you to show that you would also be willing to spend some time after the sale helping the buyer get acclimatised to the business. If you think it will help the sale, be prepared to work for the company for a fixed period after the sale is completed .

• Think ahead:  Preparation and planning is crucial to achieve maximum value and ensure a smooth and timely transaction process. The sale process will typically take 6 to 9 (possibly 12) months from when you first start formally marketing the business for sale.  Therefore you need to start preparations 3 to 4 years before you actually want to exit. Make sure you understand what a future buyer will be looking for and what factors they consider to be attractive in a business. Potential buyers are looking to see consistent revenue growth, profits, and a long-term client base. The attractive factors of your business will be things that you would want in place even if you were not selling your business. 

• Tidying up: Preparing your business for sale well in advance means doing some seller due diligence on your business to weed out any issues that could eventually cause an obstacle to a potential sale or adversely affect value and/or to engage in any restructuring of it to make it more attractive or increase value. Going to market when you are in ‘housekeeping’ mode is never a good idea and could seriously undermine your chances of success. Beware also of commencing the sales process and identifying a buyer too soon - you want to avoid being involved in the process of putting things right in the business when you have your potential buyer and their advisors observing and scrutinising your progress.  Typical tidy up areas include managing unrecoverable debts, mitigating any potential claims/disputes, ensuring written contracts are in place with customers/suppliers, and having a sound business model / plan is in place.

• Tax considerations: The detailed timing of a sale may also depend on the tax consequences, and any forthcoming changes to tax rules, something to consult with your accountants and tax advisers on.

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 James Berry or Neil Large