Selling a business requires careful planning and consideration. For many Australians their business is their most valuable investment. Below are some helpful tips for extracting the maximum value for this asset:
Sell for the right reasons:
When selling a business you want to sell to pursue a different opportunity or because you are seeking a change in lifestyle, such as retirement or relocation. The most common reason for selling a business is that a business owner falls ill – this is the worst time to sell a business! Working out the best time to sell is difficult and don’t expect the process to be a quick one.
Identify the assets of the business:
Selling a business often includes assets such as goodwill, trademarks, intellectual property, client lists and plant and equipment. These assets should be identified and protected to ensure a potential purchaser is comfortable with the quality of the asset. This will in turn increase the value of these assets. Contracts with customers and suppliers should be secured if they are critical to the success of the business.
Put a value on the business:
There are several different methods for valuing a business but the ultimate sale price will depend on normal market conditions. Your business is worth as much as a buyer is prepared to pay, but having a business valuation can be beneficial as it is regarded most favourably by potential buyers. It also gives you, the seller, a realistic target to aim for.
Make sure your records are in order:
When selling a business it is critical to keep your business records accurate and up to date. You should consider keeping inventory levels up and the business premises maintained. Also ensure any lawsuits are settled and liabilities are reduced as much as possible. Payroll records should be accurate, detailing employee personal details, wages and leave entitlements owed. These leave entitlements will normally be considered or offset against the sale proceeds at settlement. Making that extra effort to keep things in tip top shape can really pay off.
Seek professional help when selling a business:
It is important to go through a methodical process rather than making emotional decisions when selling a business. This can be difficult because business owners are emotionally invested in the outcome. You should contact Optima Partners before making any decision about your business, we have been involved in numerous business purchase and sale transactions and we can assist with the following:
- Structuring the sale for the best capital gain tax outcome
- Providing an appraisal on the value of the business
- Assisting you to get your records in order
- Referring you to the best suited business broker, lawyer and settlement agent for your business and industry type.
Careful preparation and using professional resources available are the keys to getting the best result when selling a business. If you look at the process objectively and set a fair price you will achieve your desired outcome.