Selling your business

This is your chance to reap the rewards for all your years of hard work. So it’s important to be methodical and prepare your negotiating position in advance.

Selling your business can be a hugely satisfying experience. It’s an opportunity to realise the value you’ve worked so hard to build, and to create long-lasting financial security for yourself and your family.

That’s why you need a well-considered marketing strategy. Here are some of the steps you might take:

1. Decide what you’re selling
   This is an important first step if you’re planning to operate a new business in the same industry. Are you simply selling the business vehicle? Will you keep the trading stock or the goodwill? And if so, will the sales contract include a restraint of trade agreement, preventing you from competing directly with the business or approaching its customers?
   
   Having decided what you’re selling, document it thoroughly. Make a detailed list of what’s for sale and the form in which it’s being sold.
   
   
2. Decide on a sales method
   Just like selling a house, you can either choose to employ an agent in the form of a business broker, or sell it yourself. And just as with real estate, the Internet has made it much easier to advertise your business and contact potential buyers directly. At the same time, a business broker can provide valuable insight into the market value of your business and the best way of finding a buyer. But whichever method you choose, it’s essential to get expert advice from your solicitor and accountant.
   
   
3. Put a value on it
   Now comes the hard part — deciding how much you want for your business. The unfortunate truth is that most business owners tend to overestimate the market value of their business, partly because they underestimate the level of risk that a purchaser would be taking on. So it’s important to be realistic, flexible and ready to negotiate.
   
   
4. Prepare your team
   Don’t forget to let your team know what you have in mind well ahead of time. They’re likely to be anxious, so it’s important to allay their fears and reassure them that they’ll be looked after. After all, they are essential allies in presenting your business as a well-oiled machine that anyone would be glad to buy.
   
   
5. Start marketing
   Now you’re ready to begin your marketing campaign. Prepare a detailed information package for potential purchasers, then begin advertising.
   
   
6. Negotiate
   Once you’ve found a potential buyer, the negotiations begin. Even if you have a business broker, you’re likely to play a crucial part in the process. Almost inevitably, you’ll have to make concessions to win the sale, so it can be a good idea to hold something back. Instead of conceding on price, consider other ways you could add value. For example, you could begin by excluding trading stock from the sale, then offer to throw it in during the negotiation process. Or you could agree to provide training, or to stay on as a consultant after the sale.
   
   
7. Finalise the sale
   Once the contract has been signed, the purchaser will usually pay a deposit, which is typically held in trust by a solicitor, real estate agent or business broker. After that, the transition begins in earnest. Your sales contract will detail requirements for payment of the balance of the price and the transfer of the title and business assets, with settlement usually taking place within 30 days after contracts are exchanged.

Where to find out more

• Commonwealth government guide

• Important information
  As this advice has been prepared without considering your objectives, financial situation or needs, you should, before acting on the advice, consider its appropriateness to your circumstances. All products mentioned on this web page are issued by the Commonwealth Bank of Australia; view our Financial Services Guide (PDF 59kb).