Whatever the reason, preparation is the key to making this process much more manageable!
Being prepared includes diarizing or documenting the sales process so important decisions don’t have to be made on the fly, and formulating questions and answers you would expect from potential buyers.
The Sales Process
Below are some points to consider throughout the sales process, so you can ensure each area is right for you and your current circumstances ahead of time.
- Make sure selling is the right decision : have you come to this decision on your own or are there other factors that have brought this sale on?
- Decide whether to use professionals to sell your business
- Value your business: How much would you like to sell for, or has the market already placed a value on it?
- Find buyers for your business
- Negotiate the sale
- Prepare the contract
- Take care of your employees
- Deal with legal matters and tax implications of the sale
- Transfer your business to the new owner
- Look after yourself
The government website has useful information that goes into each step in more detail - https://www.business.gov.au/closing/selling-or-closing/sell-your-business
When you know you that going ahead with the sale of your business is right for you, it's important to have some expected questions and answers prepared for potential buyers. Our clients have listed some of the less expected topics that have come up when speaking to potential buyers:
- When does your lease expire and what are the terms?
- Do you have consistent, signed, up-to-date contracts with your customers and employees?
- Are your ideas, products and processes protected by patent or trademark?
- What kind of technology do you use, and are your software licenses up to date?
- What are the loan covenants on your credit agreements?
- How are your receivables? Do you have any late payers or deadbeat customers?
- Does your business require a license to operate, and if so, is your paperwork in order?
- Do you have any litigation pending?
You will also need to consider any insurance requirements for your business, such as run-off cover. This is a specific cover where you are insured for any legal claims that are made after you sell your business.
Also take into consideration Capital Gains Tax (CGT) and Goods & Services Tax (GST) that apply to the sale of your business. For example, if your business is registered for GST, you may need to include GST in the price of individual business assets or repay GST credits. If you are selling a small business, CGT concessions may be available.
Get further clarification when preparing to sell your business and discuss your requirements with our team at BLG Business Advisers. Get in touch online or call (02) 4229 2211 to find out more.