Tag Archives: business sale

guide to selling your business
Core Business Brokers

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’.)

  1. 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.

  1. 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!

restraint of trade non-compete agreement
Core Business Brokers

Restraint of trade / non-compete clauses explained

Restraint of trade/non-compete agreements are typically included in employment contracts to prevent employees from using insider knowledge to either create their own competing business or to benefit an external competitor in the industry should they choose to leave the company’s employment one day. But what role do they play in business sales? Let us explain…

When selling a business, a restraint of trade/non-compete agreement is crucial to give the buyer peace of mind when taking over the reins. How? Because these legal stipulations prohibit the seller from taking their years of knowledge, expertise, loyal customer base and employees and setting up a competing business just down the road once they have sold their business and received payment for it. If this were to happen, the result would be debilitating for the buyer, who has just spent a great deal of money on a business that is destined to struggle due to a new competitor (the previous owner). This is why a restraint of trade/non-compete clause is so critical when selling and buying a business.

What to expect in a restraint of trade clause?

For restraint of trade or non-compete clauses to be both acceptable and enforceable, they must first be seen to be reasonable. This includes the duration in which the clause is active; the radius in which it covers; non-solicitation components which cover whether the seller can employ current or past staff members of the business, as well as clients and suppliers; and much more. All these components have a large impact on the business after it is sold, so it is important to agree on the finer details of the restraint of trade/non-compete clause before settlement to ensure you (the buyer) are making a wise investment. These restraint clauses will form part of the legal contract of sale.

Examples of restraint of trade clauses

A small café may have a 2-year non-compete agreement where they cannot open a café within 5 kilometres of the existing business and cannot employ/poach/discuss any details on operations with staff, suppliers and patrons. A large-scale distribution business, however, may have a non-compete agreement that prohibits them from operating in the same business nation-wide for an extended period due to the larger investment and risk associated with the business purchase. When creating or discussing a restraint of trade agreement, it’s important to make it reasonable. Consider who the client base is and where they are located to ensure you (the buyer) are not asking unreasonable requests such as a 20-year restraint, nation-wide for a small corner store with no online capabilities. So in the event of a restraint being challenged in a court of law, the court will take into consideration all the above items and determine what is reasonable for that particular business.

Last but not least, we highly advise that all agreements and contracts be reviewed and discussed with your lawyer before signing on the dotted line. A restraint of trade/non-compete can be a highly important tool in business negotiations if done right. 

If you are looking to buy a business or are hoping to sell yours in the near future, contact Core Business Brokers today, on (02) 9413 2977, or email Roy at [email protected]. Our industry experience and knowledge will help guide you through the process, making it a pleasant journey along the way.