Selling A Business

Is It The Right Decision?

Before you actually commit to selling your business, there are some things you should consider. This isn’t something you can easily undo, so you will want to be sure it’s the right move to make. You need to weigh the reason for selling with any reasons for keeping it.

It may be a good idea to make a list of pros and cons to organize your priorities and thoughts. In cases when emotions are involved, it’s also a good idea to step back a bit from the situation and logically evaluate the circumstances. You don’t want to make any hasty decisions driven solely by emotions.

Should You Use Professionals?

When you know selling is the right thing to do, the next thing you need to choose is whether you’re going to try and do this yourself or if you want to get a broker for professional help. It’s far easier than it used to be to sell your business yourself and you’ll save money on broker commissions, which can be fairly steep, especially to the small business owner.

However, doing it yourself means you’ll need to put in a great deal of time and energy. You’ll want to be as organized as possible to make sure the regular running of the business isn’t affected. Having a broker to help will likely get you the better price for your business and make everything far easier on you.

However, you will have the commission and fees to pay, and you’ll want to do research on the broker to make sure you completely understand their costs and process. There is no doubt some brokers are better than others and you’ll want someone you know will do a good job.

What Exactly Is For Sale?

Depending on your business, you’ll want to decide on what’s included in the sale. The simplest answer is you’re selling everything, but are there some assets you want to hold onto? Is the name of the business included as well? What about the intellectual property of the business? Do you want to maintain some of the business’s properties?

You don’t have to sell everything all-inclusive. If you plan on starting another business or even using some property for personal reasons, you’ll want to settle all of this before you speak with a buyer.

What’s The Value Of Your Business?

The next step in this process once you know you want to sell, if you’re using a broker or not, and what’s included in the sale is to determine the value. You don’t want the price to be too high as to scare away any potential buyers, but you also don’t want it to be too low since you’re likely to face lower offers.

If a buyer puts in an offer and you don’t budge at all, they’re less likely to agree with you. Most buyers expect a little back and forth. To find a good price you can look at similar businesses, base it on the return of investment, or figure out the business’s net worth.

How Will You Find Buyers For Your Business?

Buyers are likely to research a great deal before deciding to reach out. This is where being organized really comes into play. The more information you can provide a potential buyer, the quicker they can make the decision that your business is something they want to acquire. The average time it takes to sell a business in Australia is 6 months to 9 months. If you try to push buyers or hurry things along you may end up losing the buyer or getting a lower price than you would have if you take your time. Being patient gives you the space you need to prove out worthwhile your business is.

Step 1: Negotiate With The Buyer

There will be many things involved in negotiating the terms of the sale. You’ll want to make sure everything is clearly discussed and decided on to make sure there are no misunderstandings or miscommunications. Take your time to go over everything.

You’ll need to decide how to handle the assets and liabilities. You’ll also want to discuss the settlement time period and the deposit price. Transferring and business details like training and regulations should be settled as well. You should use this time to make sure there are no surprises.

Step 2: Formalise The Contract

The contract needs to involve both sides and their lawyers to make sure everything discussed is in order. Don’t rely on one side to set everything up, even if they seem like great people who are considerate of your interests.

The contract should be read by everyone and understood. If you’re uncertain about a specific part, don’t let it slide. Ask your lawyer to explain it to you. This is another part that you want to take your time. It’s better to take longer to be sure you understand what you’re getting out of the sale than it is to hurry and end up with a bad deal.

Step 3: Consider Current Employees

Once you know that you’re going to sell your business, you need to make sure your employees understand what’s going on. It can be tempting to keep them in the dark because you don’t want anyone to quit and leave you short-staffed, but not keeping them in the loop will cause more problems later in the process.

Make sure they know the projected length of the process, and you must understand that this is essentially ending their employment with you. If you’ve made certain that your employees will transfer with the business to the new owner, you’ll need to make sure that all the required employee information is given to the new owner, as well as employee benefits.

Step 4: Meet Your Legal Obligations

You’ll want to be certain that any insurance, tax, or legal forms and responsibilities are taken care of. Make sure to take advantage of any expert guidance you have access to. Some things to look into are if your state or territory has any requirements you may have overlooked and see if you need to pay capital gains tax (CGT) or goods and services tax (GST).

It’s important to be sure any advisors you’re dealing with are registered. Another thing you’ll want to remember is to hold onto your business records for at least five years in case you need them.

Step 5: Transfer Ownership Of The Business

It seems like every step of this process takes ages to muddle through, and transferring all the business licensing is the same. Because of different filing and processing time frames, it can take up to a year to complete all of this.

You need to transfer any leases, permits, and licensing to the new owners. If you don’t make sure everything is transferred correctly, you could find yourself liable for something you’re no longer attached to. This could create all types of issues for both you and the buyer.