Selling a business can be stressful however if you take the necessary steps to prepare your business for sale you are much more likely to achieve a higher sale price and have a smooth transition of ownership. Connect Business Brokers is committed to assisting our clients every step of the way. Below we have put together some practical advice that will help you prepare your business for sale:
BE PREPARED FOR THE ADDITIONAL COSTS INVOLVED WITH THE SALE
Speak with your accountant and solicitor to become aware of any additional fees that may be incurred. Your accountant should be able to give you an estimate of tax that may be payable on the business sale. It is also likely that you will incur additional costs from your accountant during due diligence. Your solicitor should be able to give you some idea on legal fees, you may also need to consider the legal fees of your landlord if an assignment of lease is involved.
ENSURE THE BUSINESSES FINANCIAL INFORMATION IS ORGANISED
Make sure that current tax returns and BASes are lodged and that your corporate records are up to date and in good order. Having this information current and available for the purchasing accountant to review will make the sale process smoother and more efficient.
START PREPARING A LIST OF WHAT’S INCLUDED IN THE SALE PRICE
Double check the ownership of plant and equipment. Are the assets of the business leased or do you have a rental agreement? Are all the assets in the correct entity name? Does your equipment have any PPSR charges over it? Buyers will want to know this information.
BE AWARE OF YOUR COMMERCIAL LEASING ARRANGEMENTS
Review your leases expiry date and check if there are any options on your lease as this may affect the ultimate sale price. For instance, if you are trying to sell a highly profitable retail shop in an excellent location the value will be affected if the lease expires in the near future and the landlord will not renew. Be prepared that buyers will use information like this to negotiate on pricing.
REVIEW YOUR STAFFING ARRANGEMENTS
Are you over or under staffed? Potential buyers will want to know all about your employees. Consider if you are going to tell your employees about the business being offered for sale. Do you have any employees that may be interested in purchasing your business?
MAKE SURE YOUR INTERNAL PROCESSES AND PROCEDURES ARE EFFICIENT
Having reliable systems before you try to sell your business means it will be less likely that buyers will find inconsistencies when the business goes through the due diligence process. This will increase the chance of the sale proceeding smoothly.
REVIEW WHAT IS GOING ON IN YOUR AREA
The location of your business and what’s happening in your suburb can impact on the value of your business. For instance, a local bakery would benefit from a new housing estate. This would be perceived by the buyer as potential for increasing revenue and therefore increase the value of your business.
DON’T LOSE FOCUS
Keep sales steady and growing as this will maintain your business value. Declining performance over a period of time decreases the chances of achieving your targeted sale price. Maintain a healthy business and keep good relationships with your employees and customers even though you have plans on selling.
THINK ABOUT THE POTENTIAL IN YOUR BUSINESS
Buyers like to know that the business has potential to grow and become even more profitable. Potential increases the value of your business and makes it more attractive to buyers.
BE REALISTIC WITH YOUR SALE PRICE
Engage a professional such as your accountant who has all of your financial records and history of the businesses performance to establish the business value. Setting an unrealistic sale price will only prolong the sale process.
DON’T TRY TO NAVIGATE THE SALE PROCESS ALONE
Engaging a business broker will give you the time to continue running your business successfully. Business Brokers will qualify buyers so your time is not being wasted with buyers that don’t have the capacity to purchase. They are skilled negotiators and can achieve a higher selling price and can guide you through the entire sales process.