Selling your business

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Last updated on May 15, 2013
Questions to consider when selling your business include when is the best time to sell, whether you should use the services of a broker, and how to decide the value of your business.

There is a number of methods for valuing a business, including valuing the goodwill component. To realistically value a business, you need a good understanding of the marketplace.

Knowing how potential buyers think will help highlight your business’s outstanding attributes for a successful and profitable sale.

Consider what potential buyers might be looking for:

  • an operator will be seeking the ability to earn a good living, as well as freedom and a rewarding challenge
  • an investor will be focusing on profitability and rate of return
  • a competitor will want to increase the size of their operation.


The next step is to finalise the value of your business. Should it be sold as a whole, as a going concern, or divided up?  How do you put a value on such things as goodwill and a website?

Over time, an industry usually develops its own rules of thumb by which a business is to be valued. There are also formulas that can be used to deduce the approximate value of a business and its future earning potential.

Use the resources of your accountant and other trusted advisors and/or brokers as you consider these issues, before you proceed to sale.

 

Who to tell

When you sell or wind up a business, you must tell certain organisations about the change in status of your business.  Depending on the industry in which you have operated, you may need to notify:

  • the Australian Tax Office
  • your local council
  • regulatory bodies
  • licensing agencies
  • industry associations
  • your landlord
  • your bank manager
  • your accountant
  • your lawyer.


It’s also good practice to tell people you have been doing regular trade with, as well as those with whom you’ve built up relationships over the years.  This includes your customers, suppliers, business associates and advisors, and network contacts.

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