Selling your business

This is your chance to reap the rewards for your years of hard work. 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 create long-lasting financial security for you 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 important if you’re planning to operate a new business in the same industry. Are you selling the business vehicle? Will you keep the trading stock or 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?
   
   Make a detailed list of what’s for sale and the form in which it’s being sold.
   
   
2. Decide on a sales method
   You can either choose to employ a business broker or sell it yourself. The Internet has made it much easier to advertise your business and contact potential buyers directly. A business broker, however, can provide valuable insight into the market value of your business and the best way to find a buyer. Get expert advice from your solicitor and accountant.
   
   
3. Put a value on it
   The unfortunate truth is 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. It’s important to be realistic, flexible and ready to negotiate.
   
   
4. Prepare your team
   Let your team know what you have in mind well ahead of time. It’s important to allay their fears and reassure them they’ll be looked after. After all, they’re 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
   You’ve found a potential buyer, now negotiations begin. Even with a business broker, you’ll play a crucial part in the process. You’ll inevitably have to make concessions to win the sale, so hold something back. Instead of conceding on price, consider other ways to add value. For example, begin by excluding trading stock, then offer to throw it in during the negotiation process.
   
   
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. 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).