When preparing a company for sale, timing is critical and grooming is important to maximise your sale proceeds and make the business an attractive proposition.

Enhancing profitability is a key objective: this should be done sensibly without harming the core business, for instance, by reducing discretionary expenditure such as research and development, advertising and marketing promotion and even directors' bonuses. You may also wish to review staffing levels to ensure you are working as efficiently as possible.

You also need to consider strategies for enhancing revenues, improving the quality of the business' earnings and showing an upward trend in growth. For instance, you may try to improve margins by increasing prices; consolidate revenues by negotiating long-term contracts with customers; and improve the quality of the customer base by pruning out low-margin and/or slow paying customers.

Also, you need to be able to hand over the business in working order, especially if you want a clean break and have no further involvement. A management team that can carry on without you is therefore essential.

Finally, you need to consider important 'housekeeping' issues. It will be worth undertaking a legal review to ensure that title to the company's assets and contractual matters are in order and that any legal disputes are concluded. A tax review will also be worthwhile to draw a line under any issues with the Revenue or Customs & Excise. Some of these issues can take time to deal with and you need to start planning a grooming timetable well in advance of offering a company for sale.

"Houghton Stone (accountants) newsletter" winter 2000