The most common way to sell a small business here in Australia is to sell your business as a going concern. But what does “selling your business as a going concern” actually mean? We break down this term, the process and the top things to consider when embarking on your business sale journey right here in our latest blog.
What does “going concern” mean?
The term “going concern” essentially means the business will continue to run for the foreseeable future as it has done in the past. Unlike businesses that are sold as a collection of assets, or sold in part due to many variables, selling a business as a going concern means that the business is alive and well – operating successfully in the local community (for hopefully many years to come). For that reason, financial documents, as well as a continuing lease (where appropriate) and critical contracts are what determine whether a business can be sold as “a going concern” or not. Your business Accountant will help you determine whether your business can be classified as such.
What is selling your business as a going concern?
To sell your business as a going concern essentially means the business will continue to run seamlessly as it transitions ownership. It also means:
● Everything that is required to run the business is included in the sale (such as plant and equipment, assets, stock, staff and premises)
● The current owner is happy to continue running the business up until settlement day when the business transitions into the hands of the new owner.
Click here to access the latest information from the Australian Taxation Office regarding selling your business as a going concern as well as the GST consequences of the business sale.
There are a few things for buyers to look out for when buying a business as a selling concern. Red flags include internal and external risks (such as loss of employees or suppliers) as well as any financial red flags when conducting your due diligence. This is why having a business broker and business Accountant in your corner (whether you’re a buyer or a seller) can safeguard you throughout your business sale/purchase journey. These professionals know what to look out for and understand the process like the back of their hands. Alleviating anxiety and reducing potential risk.
If you are looking to sell your business soon, contact us to discuss your goals and timeline today. Our team of experienced business brokers are always happy to schedule a discussion and chat through your options. Give us a call on (02) 9413 2977, or email Roy directly at [email protected] or Rad, at [email protected] to begin your business journey today.