A guide to selling your business
So, you’ve decided to sell your business. You want to change your lifestyle, spend more time with your family, grow your wealth in a completely different direction… Whatever the reason – selling your business is the means to get there. But you’ve never done this before! So where do you start?
Here’s a handy guide to selling your business from the start to the very end (or shall we say, ‘new beginning’.)
- Evaluate the reason for sale and make sure it’s right for you
If you’re selling your business to achieve a goal, create a better work/life balance or are hoping to branch into something new, make sure that selling your business will achieve this goal entirely. Consult your accountant or a business advisor to ensure you are making a calculated, logical decision that will achieve your purpose.
- Choose your Broker, Accountant or Solicitor
You wouldn’t want to play a Grand Final football match with a terrible team, so why sell your business with one? Contact us here at Core to discuss your business and learn how our combined 80 years’ of knowledge and experience in a broad spectrum of industries could assist in your sale process. Alongside an expert Broker (our principal is a Chartered Accountant), you’ll also need your own Accountant and/or Solicitor to assist in the process. Don’t have a phone number to call? We have connections if you find yourself needing a recommendation.
- Decide what is included in the sale
Do you want to include all the assets? Intellectual property? Physical premises? Think about whether selling 100% of your business or a portion of your business is the best option for you. Whilst selling a portion of your business will mean that you are inheriting a new partner, we have strategies that can be put in place to ensure a successful outcome.
- Confirm the value of your business
Here at Core Business Brokers, we will conduct a valuation/appraisal which determines what your business is listed for on the current market. We’ll assess your profitability, ROI, growth and prospects alongside goodwill, assets, stock and equipment as well as the current market to come to a value that accurately represents the business being sold. You will receive an honest opinion as to the value range, together with an explanation of how we arrived at those values and not a high number to get you to sign and then find that the market will not pay that price.
- Advertise your business and attract potential buyers
Your Business Broker will also take care of all advertising and potential buyer interaction. Depending on your industry, different advertising methods should be used to attract the target buyer with the objective of providing you with a few options from buyers. Here at Core Business Brokers, we also have an extensive network of qualified buyers and business owners to reach out to through years of experience in the industry.
- Negotiate the sale
This will involve meetings and discussions between yourself and the buyer with your Business Broker acting as a moderator on your behalf. We will lead the negotiations, keeping your priorities front of mind, whilst walking you through the process to come to a suitable sale agreement.
- Prepare the contract
At the end of the negotiation period, a formal contract will be drawn up that entails all inclusions/exclusions of the sale agreement. It will identify relevant property and assets, stock and fixtures that are being transferred along with the business as well as responsibilities, restrictions, entitlements and more. The more accurate and transparent, the better – allowing a smooth transition between parties. Core Business brokers typically prepares a term sheet which sets out all the agreed terms and conditions and this will make it easier (and cheaper) for your solicitor to prepare the contract of sale.
- Think about your team
Honesty and transparency about your business sale will alleviate anxiety and stress felt by your staff. Sometimes the team will continue their employment under the new ownership, whilst other times they will not – it all depends on the contractual agreements in place. If your team will no longer be required, you must give them adequate notice of this change. If your employees continue to work for the new business owner, ensure that all prior entitlements be transferred and acknowledged so that your team are taken care of during the transition.
- Finalise the details
Discuss all taxation requirements with your Accountant, as there may be capital gains tax consequences on your business sale and hence a share sale may be more beneficial to you. Alongside this, you may be eligible for certain capital gains tax concessions depending on your business size. A lot of information can be found on the ATO website, or simply discuss this before embarking on your business sale journey with the Accountant of your choice.
- Transfer ownership
And now for the final step! The transferral of business ownership. This includes any lease agreements, permits and licenses as well as the transferral of business names and the cancellation of applicable ABN’s, unless the sale takes place by a sale of shares of the company.
It may seem straight forward, but a business sale is an intricate process and there is a room for many an error if you don’t know how to prepare or proceed. Let our experience in the industry guide you through the steps, alerting you to common mistakes and areas of interest to you and your unique situation.
Contact Core Business Brokers today, on (02) 9413 2977, or email Roy at [email protected]. With the right Broker by your side, your business sale journey can be the perfect way to wrap up ownership and start that new beginning, stress-free!
