Selling your Business

You've made the big decision: it's time to sell your business and cash out. But first, there are lots of small things you can do to guarantee maximum return on the asset you've spent so many years building. Lets examine some of the more important issues.

Start Planning Early

At the outset, it's important for you to sit down and do some serious thinking about what exactly you want from the sale. On average, once your business is on the market, it will take about a year to find a buyer and complete the deal. If you know you'll want to sell by a certain point in time, you should start planning for it at least a couple of years in advance.

Shape up your financials

Cash is king. So the most essential step you'll want to take is to have your accountant clean up your income statement. Make sure your financial records have been kept accurately and in detail. Consider switching to a computerised accounts system, if you have not already done so. Be ready to explain any unusual figures.

Shape up your documents

Ensure that all legal documents relating to your business are up to date and accurate. These may include leases, hire-purchase agreements, client and supplier contracts, staff contracts, patents, trademarks etc. 

Shape up your business

Target your more obvious weak points and bring them up to par with the rest of your business. This may involve renovating your business premises, expanding your client base, updating equipment, balancing stock levels etc.

Communicate with your staff

Be honest with your staff - let them know that you're planning to sell, and that you'll do your best to ensure that they can continue with the new owners if they wish. At the same time, try and give more responsibility to senior staff members - it's best if the business doesn't appear to depend too heavily on your own involvement.

Provide information to buyers

Prepare detailed information on your business - cover everything, such as day-to-day operations, information on your competition, relevant industry information, research and development issues and a history of your business. You should also include information about any software you use, with manuals and instructions and what back up procedures are in place. This will give the buyer confidence they can continue running the business.

Consider who you want your purchaser to be

Who do you think will want to buy your business? Is there someone internally who might be interested? Do you know someone who you can employ with a view to them buying you out in the future? Will you sell to a competitor or a large corporate? Are you willing to continue working with the purchaser in the business after the sale? Are you interested in a gradual buy out? Answering these and similar questions about the kind of purchaser you are willing to sell to will assist you in determining your next steps.

Be aware of other costs that might be involved 

Find out as much as you can about the costs associated with selling your business. You need to take these into account when considering how much you want from the sale of the business. They can be significant. You'll want to know whether any Capital Gains Tax is payable, but even more importantly, there may be things you should be doing now that may save tax at the time of the sale. For example, are you eligible for the Small Business Capital Gains Tax concessions and if not, is there anything you can do to change your eligibility? You might also want to know what your GST obligations are on the sale. You wouldn't want to find out that you have to remit 10% of the sale price after the contract for sale is signed.

Use professionals

Use the professional guidance of an accountant, lawyer, business broker, business appraiser/valuation expert, tax expert and/or banker or other financier.

We can help! Call Dewings on (08) 8291 7900 if you are planning to sell.