08/10/2013 08:36 BST | Updated 08/12/2013 05:12 GMT

Recession Over - Time to Sell Your Business?

Phew, the economy is finally starting to pick up, as is the enthusiasm of business owners to sell up - and what a mess some will make of it. Is the time even right?

Phew, the economy is finally starting to pick up, as is the enthusiasm of business owners to sell up - and what a mess some will make of it. Is the time even right?

People can spend a lifetime building up their enterprise but turn the selling of it into an abject failure. The temptation for many to think that having weathered the recession now is the time to move on is high.

But the truth is that a business has to be prepared for sale, not simply put up for it when the owner decides, and the strength of the wider economy is not the only factor to take into account.

An owner needs to answer this question: Why now? For many the calculation is more complex than retirement. Often it is to do with seeing a new horizon for the firm, one that needs fresh money and fresh thinking.

Other triggers to sell can be the need to find someone with access to new markets, or a lack of money to fund growth, or realising that the business is doing well and better to make the sale before that particular boat sails and profits slump.

Whatever the motivation, the owner of a private business should begin the process about a year ahead of when they want to vacate the boss's parking space for the last time.

The key start to any marketing process is a warts and all review. What works and what could work better? Be honest because a buyer will be. Keep off any rose-tinted glasses and remember that selling a business can be much more of an emotional activity than buying one.

Identify issues before the sales process begins rather than be surprised by some embarrassing question in the middle of due diligence. The first thing is to be honest about commercial strengths and weaknesses. Also, be clear about the management team and take advice on tax issues. Blow the dust off shareholder agreements and employment contracts, because they will be needed.

Part of the point of doing all this is to avoid giving a potential buyer an excuse to chip away at the sale price, or worse cause a sale to be cancelled, which is potentially very damaging to the reputation of a business.

Good due diligence also pays off in terms of tax planning, particularly making the most of the very valuable entrepreneurs relief whereby capital gains of up to £10million are taxed at just 10%.

It really is important to think hard about taxes, particularly the temptation to leave the country to mitigate them. I know people who soon tire of their haven in the sun and long for home.

Good advisers are crucial because selling a business is a tough activity. There are invariably issues and brinkmanship. A bad adviser will be impatient, have no negotiating strategy and may even pressure a seller to accept a lower price at the last minute, just for an easier life.

When it goes wrong, often through poor planning, a business sale can be a nightmare. My personal library of horror stories includes emotions getting in the way of a commercial process, so a £3million sale was jeopardised by a squabble over a £50,000 legal fee.

People will also sell before addressing a structural issue and lose their entrepreneur's relief, thus paying tax on the proceeds at 40 per cent instead of 10 per cent.

It is also surprising how often owners forget to tie in key workers who are not shareholders. Instead, they watch them walk through the door with the business and scuppering an earn out.

Sometimes buyers are just opportunistic, and will walk away readily, or try to chip away at the price.

Not that anyone should be put off. It is just that selling a business needs the same attention as went into building it, or risk watching that building turn to dust.