If you’re considering selling your business, have we got the guide for you! We’ve decided to put together a handy business sale guide to assist business owners when entering their business sale journey, particularly if it’s their first time selling a business.
Step one: Find your WHY?
It’s important to identify the reason(s) why you’re selling your business, as this will determine what steps you take prior to the sale. For instance, a business selling due to financial hardship may be difficult to sell, as a new buyer will look to historical financials in order to predict the future earnings. The reasons for the financial hardship would need to be explained in detail. In addition, expect a lower offer than predicted as a buyer would take advantage of the situation. For a business that is selling because the owner wants to retire, this is always a reason that is attractive to a buyer provided the business is profitable of course. It is important to identify the reason why you want to sell your business before embarking on your business sale journey.
Step two: Prepare
From financials and tax returns to organisational documents, staffing, contracts and more. The more prepared you are before your business sale journey begins, the better. An organised business showing a good trend in profitability is more likely to attract qualified buyers and sell successfully and efficiently.
Step three: What IS included in the sale?
The sale of a business may trigger a Capital Gains Tax for the shareholders so it is important to obtain initial advice from your Accountant whether it would be tax advantageous to sell the shares of the company that own the business or sell the assets of the company instead. Are all assets, plant and stock included in the sale or are there any personal assets that need to be excluded? Will the staff continue working in the business, particularly key staff members?
Consider all aspects of the business and whether they’ll be included in the business sale transaction. Do your own SWOT analysis to identify easy steps to improve any threats or weaknesses identified.
Step four: Find your team
Find a Business Broker that resonates with you and your business and that understands your situation and goals. Remember that an offer with a slightly lower dollar value (but with terms that suit your personal needs) may be preferable to a more favourable offer with more restrictive terms.
It’s not only about the $$$. A Broker with experience in the industry and knowledge of your industry will be able to provide insight into this unknown process. Sure, you can sell your business without a Business Broker. But there are a lot of components to consider, paperwork to navigate and negotiations to mediate – all of which your Broker will guide you through with years of expertise under their belt.
Step five: Let the process unfold
By this point you’ve provided up-to-date, organised documents and financials to your Business Broker. You’ve discussed your business in detail with them and have established a clear and transparent plan. From here, it’s up to the Broker to prepare a professional Information Memorandum and then to advertise the business in the appropriate media, qualify buyer enquiries and bring qualified buyers to the table.
The aim would be to bring a number of qualified Buyers who would all make offers for the business and thereby provide options for the Seller to choose the best deal that suits their needs. Your Broker will lead you through the process, paperwork and negotiations which will finally (if all goes well) bring you to settlement, our final step in the guide.
Step six: Finalise the sale = Settlement
The t’s have been crossed and the i’s have been dotted, now it’s time to sign on the dotted line, settle and hand over the keys. Sure, there’s more to the process than that sentence alone, but once your ducks are in a row – you’re pretty much at the end of your business sale journey.
If you’re looking to sell your business, take a look at our step-by-step guide for a little more insight into what you can expect along the way – or contact Core Business Brokers today on (02) 9413 2977, or email Roy directly at [email protected] or Rad, at [email protected]
Our friendly and knowledgeable team are always here to assist your business sale needs, from the very first conversation to the settlement celebrations.