Selling your business is a big decision and one that requires careful thought, planning and professional advice.
Before you move forward, it’s important to consider your reasons for selling.
It’s likely to be one of the first questions that a prospective buyer will ask and your answer can influence their interest and your negotiating power.
Useful information:
Understanding the different types of buyers and what they’re looking for can help you better prepare your business for sale.
An owner/operator will want a business that provides a stable income and manageable day-to-day operations.
An investor is likely to focus on financial performance, scalability and return on investment.
A competitor may see value in acquiring your market share, customer base or operational efficiencies.
Preparing your business with these perspectives in mind can make it more appealing to a buyer and therefore easier to sell.
Getting your business ready for sale can make a big difference to how quickly it sells, the level of buyer interest and the price you achieve.
A well-prepared business looks more professional, is easier for buyers to understand and gives them greater confidence in the purchase.
Things to consider when preparing your business:
Make sure your financial records are up to date and accurate. This includes getting your accountant to prepare profit and loss statements for the previous three to five years.
Review your systems, processes and agreements.
Ensure employment contracts, supplier agreements, leases and licenses are current and transferable where needed.
Aim to resolve any legal or compliance issues before going to market. Buyers will typically perform due diligence and may be deterred by unresolved problems.
Consider what different buyers are looking for, such as strong cash flow, reliable staff, loyal customers or opportunities for growth.
Determine what specifically is for sale (for example, physical assets, commercial opportunities, intellectual property).
Make a list of the assets for sale including an approximate value of the physical assets. You may need formal valuations of these.
Provide a professional estimate of the value of the business (capitalisation of net profit or value of physical assets).
Determine whether external assistance is needed to sell the business or not, such as from a real estate agent, broker or accountant.
A business that is well-prepared not only sells faster, but is more likely to attract serious buyers and lead to a smoother handover.
Getting advice from a business advisor or accountant can help you put your best foot forward.
An MOI is crucial as it defines the company's structure, powers and limitations.
This document outlines the rules governing the company's internal operations, including the rights and responsibilities of shareholders and directors.
An MOI is likely to also include:
an overview of the business
information about customers and the markets that the business operates in
growth opportunities
financial position and performance
sale price and appraisal.
The business may be offered to a list of potential buyers or be publicly advertised.
Once a buyer has been identified, then other specific issues relating to the sale can be discussed.
These are likely to include:
finance and payment of the purchase price
timeframe for change of ownership
management of any existing employees, customers and suppliers
future role (if any) for the current owner.
If you’re considering selling due to financial difficulties, it’s important to pause and assess your situation.
Selling may not always be the most strategic or beneficial move for you. In some cases, there may be better options available to help stabilise or restructure your business before making a final decision.
Like any major financial decision, it’s essential to get professional advice. Speak with a qualified accountant, business advisor or financial planner to ensure you're making the right move at the right time.
Selling a business is a complex process, and getting the right advice can help you to avoid costly mistakes and get the best result.
Engaging experienced advisors gives you the confidence that you are meeting your legal and financial obligations and presenting your business in the best light.
Having the right people to advise you means that you’re more likely to get a fair deal, minimise stress and avoid issues before, during or after the sale.
Professional advisors include:
Accountants – prepare financial statements, understand tax implications (like capital gains tax) and identify if you’re eligible for any small business tax concessions.
Business brokers – assist with pricing the business, preparing the sales listing, marketing it to potential buyers and negotiating the final sale.
Solicitors – handle legal documents like sale contracts, leases and agreements. They will ensure that the transaction complies with the law and that your interests are protected.
Having the right people to advise you means that you're more likely to get a fair deal, minimise stress and avoid issues before, during or after the sale.
When selling your business, it's important to understand how the sale will be structured.
These are the two most common options:
Asset sale – this involves selling the individual assets of the business, such as equipment, stock, customer lists and/or the business name. With an asset sale, the buyer doesn’t take on the company itself, which reduces their risk. This is more common for smaller businesses or sole traders.
Share sale – if your business operates as a company, you may sell the shares in the company to a buyer. This means the business continues to operate as is, with all assets, liabilities and contracts remaining in place. Share sales are usually more complex and may involve more significant legal and tax considerations.
Each option has different tax and legal implications.
The right structure will depend on your business type, the buyer’s preferences and your goals for the sale.
It’s important to get professional advice before deciding how to proceed.
