There is no substitute for careful planning when it comes to selling a business.

Conquering corporate America is simpler than it seems. In early 2005, Steve Chen and Chad Hurley were aspiring entrepreneurs with plans to develop a video-sharing Website. By October 2006, the founders of YouTube had pocketed $1.65 billion (£845.5 million) after selling the business to search engine Google.

The Website’s rapid rise and global appeal has taken some by surprise. But it’s easy to see why Google paid handsomely for a site that allows visitors to view anything from music videos and TV shows to homemade movies.

YouTube’s disposal may rank as one of 2006’s biggest US deals, but it is also a prime example of directors cashing in after receiving an unexpected bid. Research shows that UK executives are inclined to follow Chen and Hurley’s lead, with many willing to offload their companies for the right price, despite having no plans to sell.

The report, carried out by accountancy firm KPMG, found that 52% of mid-market company executives would consider a tempting offer. Meanwhile, 53% of those that sold companies during the past two years admitted the timing was influenced by a takeover approach.

Other findings show that most respondents believe one to three years is sufficient time to prepare for an exit, although directors will have far less if an unexpected offer is tabled, warns Adrian Dray, partner at KPMG Corporate Finance.

“The decision to sell a business is all about price and timing and only when both of these are right can the offer be described as tempting,” Dray added. “If the offer is compelling, owners need to move quickly and with confidence. So even if you haven’t got the ‘for sale’ sign up, the motto is: always be prepared.”

Respondents pointed to trade sales as the most popular exit route, although 25% admitted they had considered succession planning before selling their business. Some 63% of companies were snapped up by trade buyers, while private equity players and management bought the rest.

“A trade sale still appears to be the most successful exit route, underpinning the recent resurgence of trade buyers,” Dray said. “Private equity players should take note â“ with sellers open to tempting offers this is a market they should be proactively targeting or risk losing out to the corporate sector.”

Like Dray, tax specialist Lesley Stalker believes companies that receive an unexpected bid have to be prepared. Indeed, the partner at professional services firm Robert James Partnership is adamant that poor planning can cost vendors up to 40% more tax than the allocated 10% for capital sales.

Failing to prepare can also lead to executives choosing the wrong exit strategy, such as a market float or management buy-in, for their business. Other issues that need to be clarified include the reasons for selling and what the vendor is offering to potential bidders.

When speaking to Growth Business, Stalker said: “Part of preparing your business for sale is getting ready to deal with buyers and their questions. One question you are likely to be asked by prospective buyers is ‘why are you selling?’ Whatever your reasoning, think carefully and prepare your answers â“ potential buyers can easily spot if you are selling out of desperation.”

Stalker also points to valuation as a critical issue that can make or break a deal. “According to the latest research, only half of entrepreneurs planning to sell their business know how much it is worth,” she said. “The value of your business will be determined by a number of factors: its size, future growth prospects, diversification, customer base, profitability and cash flow, as well as financial management. While you do not want to undervalue your business you should not overvalue it either.”