Selling your business
Selling your business is an opportunity to realise the value you’ve worked so hard to build, and to create long-lasting financial security.
Follow these steps to create a well-considered marketing strategy.
- Put processes in place so that everything works smoothly, even when you’re not around, so that a new owner will find it easy to take over
- Keep detailed records of your systems, plans, marketing strategy and customers. It’s valuable intellectual property when you sell
- Create a unique niche with a distinct competitive advantage to differentiate you from competitors and make your business desirable to a buyer
- Recruit outstanding people
- Ensure your plant and equipment are up-to-date, well maintained and well documented
- Keep your financials up-to-date and establish cash reserves or settled lines of credit so you can offer purchasers a financially strong business
- Are you 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?
- Just like selling a house, you can either choose to employ an agent in the form of a business broker, or sell your business yourself
- The Internet has made it much easier to advertise your business and contact potential buyers directly
- A business broker can provide valuable insight into the market value of your business and the best way of finding a buyer
- Whichever method you choose, it’s essential to get expert advice from your solicitor and accountant
- Decide how much you want for your business
- Most business owners 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
- Complete a business valuation on your own business
- Let your team know what you have in mind well ahead of time
- They’re likely to be anxious, so communicate with them as much as possible
- Your team is an essential ally to present your business as a well-oiled machine that anyone would be glad to buy
- Once you’ve found a potential buyer, negotiations begin
- 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
- Add value by:
- Excluding trading stock from the sale, and then offering to throw it in during negotiations
- Agreeing to produce training
- Agreeing to stay on as a consultant after the sale
- Once the contract has been signed, the purchaser will pay a deposit which is typically held in trust by a solicitor or business broker
- After that, the transaction begins
- Your sales contract will detail requirements for payment of the balance of the price and the transfer of title and business assets
- Settlement usually takes place within 30 days after contracts are exchanged
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. View our Financial Services Guide (PDF 59kb).