Accepting the fact that your company is failing is never easy. You may have experienced both good and bad times, put all of your support behind your theories and plans, and taken every precaution to stave off making such a dramatic choice, but sadly nothing has been able to save you.
Your company may be failing for a variety of reasons, from quickly shifting markets to fierce competition, and each justifies a thorough study. This is due to the fact that selling your firm when it is in the red should always be a last resort.
You should always make an effort to endure one more storm, if you can. Tossing in the towel and deciding what to do next may be the only option, though, if all of your effort isn’t yielding results right away.
If this is where your entrepreneurial career is at, you might be considering bankruptcy or perhaps liquidation. Selling a failing business is still an option in many situations, and just as there are numerous reasons why your operation can be failing, there are numerous reasons why potential buyers would be interested in buying it. So let’s look at how to sell a failing company and get part of your money back.
Getting a Failing Business on the Market
Getting a failed firm market-ready is quite similar to getting a successful business ready for advertising. But there are some particular factors that are worth mentioning and will support you during the sales process.
Clear Litigation and Large Debts
This is an essential initial step in the process of selling your failing company. Naturally, most purchasers would give you a wide berth if there are any unresolved legal matters related to your organisation. Prioritise resolving any legal issues, and then proceed to paying off any debts. Failing businesses are sometimes sold with debt attached, but the more you pay down, the better position you’ll be in to negotiate a final price.
Identify Why Buyers Might be Interested
You can adapt your advertisement and highlight possible areas for a turnaround by figuring out why buyers might be interested in buying a insolvent company. Buyers may take into account your company for the following reasons:
- integrating your company into their already-existing operation
- acquiring assets like your clientele, a storefront, a website, etc.
- restructuring your company and making a profit with it
- Purchasing the company with more money and bearing the loss till it turns a profit
- Purchasing your company to reduce tax liabilities
You’ll have a better chance of successfully establishing your company in a crowded market if you can pinpoint one or more of these channels.
Be Honest and Open
Being transparent and truthful about your company’s current situation, potential future obstacles, and outstanding responsibilities is crucial at this point. To make sure that everyone is on the same page, you want to build trust with potential customers.
Include information about your revenue and be sure to draw attention to any losses incurred during the difficult time for your company. There’s really no point in sugarcoating the problems your company faces because they will eventually be exposed for what they are.
Consider Separating Assets
Splitting your assets up and selling them separately is another possibility if you are having trouble selling a failing company as a whole. This can include any structures and properties, machinery and technology, stock and goods, clientele, as well as your personal knowledge, expertise, and ideas.
Sometimes all it takes to separate your assets and sell them separately is the correct platform. In other cases, you might need to approach rival companies, other entrepreneurs, and uncharted territories to dump specific things.
As with any commercial transaction, having patience is crucial to the process. Your pool of possible buyers is typically far fewer when selling a failing business than it would be if you were doing so. As a result, inquiries can come in at a slower rate than usual, so you’ll need to wait patiently for the best bargain. Additionally, because they will want to iron out the specifics of any potential restructure, buyers are likely to require more time during the due diligence stage of the sales process.
Read more: Options when my business is failing
Embracing the reality that securing the optimal price for a struggling business may be challenging is a necessary acknowledgment. Nevertheless, by shifting the focus towards the possibilities that lie ahead and the untapped potential within, you have the opportunity to maximise the returns from the eventual sale.
Moreover, depending on the specific industry you operate in, there may be potential to divest smaller segments of your business while temporarily preserving the remaining portions, allowing for potential revitalization once market conditions or cash flow improve.
Ultimately, regardless of the path you choose, it’s crucial to recognise that the setback of a failing business is not insurmountable, and the prospect of your next successful venture may be just around the corner.
If you are looking to sell your failing business, make contact today and we will talk you though the process, to get started simply complete the online enquiry form.
With over three decades of experience in the business and turnaround sector, Steve Jones is one of the founders of Business Insolvency Helpline. With specialist knowledge of Insolvency, Liquidations, Administration, Pre-packs, CVA, MVL, Restructuring Advice and Company investment.