How to sell my business in a challenging macro-economic environment?

‘We are ready to sell our business’ is the initial catalyst for company shareholders to potentially engage in a sale process. When the M&A market is booming and sentiment is high then that is probably enough commitment to lead to a successful sale of the business.  However, when macro-economic conditions are not as favourable, it isn’t quite that simple. Economic conditions are currently challenging with an increasing tax burden being carried by private business in the UK and general economic uncertainty which has dampened M&A volumes. MergerMarket has indicated that H1 2025 deal volumes were 16% lower than the prior year, which in itself wasn’t exactly booming.

Rather than erecting the ‘For Sale’ sign and hoping for the best, setting out a clear vision on how to present the business, building an engagement strategy with key buyers and addressing financial and commercial due diligence concerns at the outset should deliver the desired outcome even when the economy is faltering. The investment in the preparation phase is absolutely critical to mitigate wider economic challenges.  Let’s address each of these points in more detail.

Company positioning

The fundamental question is: Why does your business exist? After years of blood, sweat and tears developing a successful enterprise, ensuring that the messaging around the potential sale of the business is critical.  Clear and concise descriptions of the key aspects of your business will be pivotal to a sale and importantly allow the buyer to quickly assess a prospective acquisition opportunity.  It is important to remember that buyers receive a high volume of acquisition opportunities, so ensuring that your business stands out from the crowd is even more heightened in a slow economy. What does the business do and why is it successful?  How does it differentiate to its competitor set? Why is it a great platform for future growth? are all typical questions that should be addressed succinctly and passionately.  It is more than likely that the buyer may never have come across your business, so educating the buyer as to why the business is a good fit is at the heart of key messaging.

Engagement strategy with key buyers

In a slower M&A market, investing greater time with a smaller party of strategic buyers will deliver a better outcome than a wider auction process.  Timing is often a key ingredient to success and by engaging with a buyer audience, it is possible to understand their timeframe for acquisition.  The buyer may have had a change of CEO or recently acquired a business it is integrating or have trading challenge, so timing might not work for them.  Therefore, selling when the buyer is ready, rather than when the seller is ready is more likely to deliver the desired outcome.  Early engagement with the buyer audience will provide the insight required to assess the correct timetable for selling your business.  For instance, a six-month pause could be better than trying to force through a transaction. 

Getting early buy-in from the acquirer will also allow them to understand why the acquisition is strategically important to them.  With a smaller buyer audience, more time can be taken to tailor the approach and identify potential synergies that can be achieved by the acquisition.  Ultimately, the seller demonstrating that it has invested time with a potential buyer, will encourage confidence from the buyer that this is the right transaction for them.  Additionally, by going to a more narrow pool of acquirers, it improves the probability that they will be successful in winning the transaction and therefore worth investing time in exploring the deal.

Diligence-ready preparation

It may seem perverse investing time in diligence before going to market, but it will save time and maintain competitive tension throughout a process.  Core financial and commercial diligence responses can be prepared and linked into the Information Memorandum to avoid future complications or potential value dilution.  Every business has its own wrinkles and foibles and there is little point leaving it to the buyer to identify them at a later point.  Clearly identifying issues and providing solutions or mitigating concerns is the best strategy as no buyer wants a surprise later down the line.  It also demonstrates a professionalism from the vendor, recognising that the business isn’t perfect but that there are no red-flags that could lead to an aborted process.

Creating an integrated data cube of historical and forecast financial information with detailed commentary on variances or anomalies will provide consistency of data in a transaction and the data cube will be basis of buyer financial due diligence later in the process. For commercial due diligence, it is important to outline where a business sits in its competitive environment, what the total addressable market is and how a business’ product or service is differentiated to its competition.

Summary

Excellent, highly profitable businesses with fantastic compound revenue growth will always sell through the peaks and troughs of the M&A cycle, but when an underwhelming economy dampens demand, buyers become more discerning for anything other than the aforementioned unicorn style companies.  Therefore, removing any transaction hurdles or obstacles through careful preparation and investment in bespoke targeting of the buyer audience will optimise the probability of a successful transaction.  This is where the advisor community can help support sellers in improving the probability of success.

Written by Simon Heath.