Rogerson Kenny Business Accountants Melbourne

Planning the sale of a business

Before deciding to sell your business, you should ask yourself a few questions:

• Am I ready to sell?
• have I considered options other than selling (such as becoming a silent partner, bringing in outside management?)
• Will family members support me decision to sell?
• Do I want freedom, away from the responsibility of running my business? (eg. to pursue other business interests, spend time with family?)
• Is the timing right? (eg. could the market and sale price be better if I waited?)
• Will the sale benefit me financially?
• Will the sale leave me free to earn my living, or will I be restrained from trading as, for example, a condition of the sale contract?

If your answer to any of these questions is 'no' then it could be a wise move to reassess your intention to sell. If your answers are a 'yes' then its time to start planning the sale!

Why are you selling?

This will be a frequently asked question. You will need to convince the prospective buyer that your reasons are genuine and consistent. Businesses are bought and sold every day. Some likely reasons are:

• I've decided it's time to move onto the next phase of my life
• I want to do something different
• I'm planning to retire
• I'm going to spend more time with my family
• I have health issues I need to deal with
• I've worked it as hard s I can, it's time for fresh blood

What is being sold?

You need to be specific about what is being sold. Selling a business differs from selling the shares in a company. If you have run the business under a company structure, buyers will mainly be interested in your buisness assets and operations, not the company itself. Selling a company does not just mean selling the business. It will also involve disposing of all its debts and liabilities, like outstanding loans, overdrafts, taxation, trade creditors, current orders etc etc

Equipment and Goods that are part of the sale

Make sure you clearly itemise the assets owned by the business that will form part of the sale.

Will the property be part of the sale?

If you are the owner of the business and the property (often referred to as 'freehold'), the question is, do you include the property in the sale? If the property is not included the selling price will be more affordable and thus attract more buyers. If you hold the property you will be provided with rental income and a growing asset. However, a buyer may only be keen on the business if the property is included - do think carefully about what you want to do. There is no harm in being flexible to both situations.

Family or Employees are potential buyers

Business are frequently handed over to family members. Some family members may expect to be given first right of refusal for purchase of the business. Employees of the business are also potential buyers. Deciding if the business will be offered to management, staff or family is important before engaging a business broker or placing advertisements in the general media. Be careful telling staff of your intentions to sell, as they can often become de motivated, wonder about their jobs and not be focused on the job at hand. Your business could take a while to sell if you are holding out for the right circumstances and buyers - so be careful who you disclose your intentions to. A key competitor would love to tell your customers about your business being for sale!

Timing

Timing is important when selling a business. As a general rule, the best time to sell is when the business and your customers / clients are peaking and the industry you are in has no dark clouds hanging over it. Make sure that any key contract you have are not too close to expiry. ie. lease agreements, supply contracts, customer contracts etc

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