Selling a business could be the single biggest transaction in an entrepreneur’s life. Getting the best deal is essential, whether the sale is to fund a comfortable retirement or raise funds for the next venture. Its not just a price issue – the best deal also involves getting the best payment structure, minimising the tax bill, and minimising the post-transaction risks.

Many SMEs are ‘lifestyle businesses’ where the income generated by the business supports the owner’s lifestyle needs. This does not just apply to people who are exceptionally flamboyant in their lifestyles. Anyone who has a family to support, holiday homes to maintain, or just enjoys the sometimes expensive rewards of being an entrepreneur needs to consider whether the returns on a capital sum paid for their business would support their needs. If not, then pre-sale grooming is needed to boost the business’s value. The project must be controlled and focused so that key results are obtained quickly.

Related: Understanding the different deal structures when selling a business

If there are tax or other compliance issues in the business the purchaser may deduct the potential liability from the purchase price, or request that the vendor signs warranties and indemnities such that if a latent tax liability crystallises in the future the vendor has to repay money to the purchaser. Pre-sale grooming identifies such issues, giving you time to correct them before a purchaser gets involved.

Common areas where a sustained logical approach reaps benefits include bringing employment contracts up to date so that they comply with current legislation; checking that leases are complete and appropriate; filling gaps in the company’s records; and gathering together customer price contracts and supplier contracts. As each item of information is gathered it should be reviewed to see if it is relevant, current, and appropriate.

Serious consideration should be made of non-performing parts of the business. A rationalisation of operations will produce a leaner more efficient business for sale.

Preparation of accurate and relevant monthly reports will help the entrepreneur control the business and provide an invaluable source of historic reference to comfort a purchaser that the business he is being told about really has been running efficiently and effectively.

No vendor would wish to see his retirement jeopardised by a sudden claim against him so tidying up the business before the sale process starts is a key part of any exit strategy.

Peter Guinn is a corporate finance partner at Alliotts Chartered Accountants & Business Advisors. For more information call 020 7759 9393 or email PeterG@alliotts.com