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Size Matters

Updated: Feb 10, 2022

Preparation is crucial when selling a business

A recent survey indicated that 37% of failed company sales occurred when businesses were considered too small. This happens when shareholders exit prematurely and their businesses are too small to be of significant interest to acquirers. Legal billings for commercial due diligence can be costly regardless of the size of transaction making it more cost effective for acquirers to concentrate on larger targets with bigger benefits.

Smaller companies can attract derisory offers, which don’t match shareholder aspirations and the end result is a failed company sale. Exceptions to this rule include the ability to leverage scarcity value, or unique intellectual property. If your business operates in a particularly attractive sector commanding higher margins, or is legislation driven size is not so much an issue.

To guard against disparity between aspirational value and the market value, it's important to value your business prior to exit. When engaging exitbydesign, a thorough financial review is always the starting point. Should the valuation not match shareholder aspirations, our services can be paused until the financial position is improved.

Some small to medium enterprises will reach a point where they cannot grow any further without significant investment. If that narrative applies to your situation and shareholders are not willing to risk further investment, then exit may prove the best option.

exitbydesign can assist in identifying a new owner with the resources to take the business on to the next level.

Call us on 01384 274 778 / 075 888 925 88 to discuss or go ahead and book a free consultation to explore your options.


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