Updated: Aug 8, 2019
There are many things to think about when selling a Business, lets take a quick look at how to prepare your Business for sale.
With all the hard work that you’ve put into running your business during the time that you’ve owned it, it’s important that you sell for the right price and get a fair reward for all your blood, sweat and tears.
Whichever way you decide to proceed with the sale of your business, investigate how you can best prepare your Business for sale. Even if you went through the process and increased the value by 10-20% imagine the difference that money could make to you.
When thinking about selling your business the first step is planning. During this part of the process, you will consider many different things to really make sure that now is the best time for you to sell.
Is now the best time to sell the business?
Only know the answer to this question but, try to make the decision more with the business side of you than the emotional side. If you feel that there is an opportunity to improve the situation that you’re currently in (and therefore the performance of the business) then you should seriously consider taking the steps to achieve this.
The early stages of this process a good time to sit down with your lawyer and make them aware of your plans to sell. It’s good idea to check the current lease to make sure there is a good term remaining or at least an option to renew. As these matters generally take quite a while it’s good to get this underway early on.
Do you know what the business is worth in the current market?
It’s good idea to take advice at this stage from professional broker, about what the business may be worth. There are many factors that go into valuing a Business and although there may be similar business is listed for sale at a certain price range this doesn’t mean that’s what they are selling for. Brokers will have access to industry information including recent sales in similar markets, this will give you a much more accurate idea of what the business may sell for.
The preparation phase is the part of the process which requires the most work, on the plus side it’s also the part that can add the most value to the business and really help you to sell quicker.
Imagine a buyer looking at your business at the same time as another business that makes about the same profit, the same turnover and is in a similar location. If you’re able to present all the information that the buyer needs you are sending a clear message that the business is well organised, structured and systematised. This will help to build the buyer’s confidence that the business will continue to perform well even after you’ve gone and reduce risk in their mind
If you talked to your accountant during the planning stage, then hopefully they will have given you the heads up about what needs to be done to get the books for the sale.
If there is one area where the sale is going to slow down, stall or fall through then it is if the buyer’s accountant finds something in the figures that they don’t like. The more work you can do in the front end to make sure the books are all straight and that the figures add up in relation to the valuation the better.
It’s good idea to have up-to-date profit and loss statements, balance sheet and tax returns and I would suggest having all this information ready for the Information Memorandums your broker will be sending out to potential buyers.
One of the things that we do at Morgan Business Sales is prepare confidentiality agreements that can be sent out in the early stages to help filter out any time wasters and keep your financial information private. These documents also cover you legally should any confidential information be disclosed.
Once you have a buyer interested in the business with the documents you have prepared and given to your broker it will be easy to share the required information to allow the buyer to carry out their due diligence.
When you do receive an offer on the business you will need to draft a heads of agreement document that instructs the legal representatives for each side about the transaction.
As the deal progresses you will then need to co-ordinate with your lawyer and potentially the managing agent for the landlord as well.
This really is an overview of the process and there is more involved which cannot all be covered in this document.
Our website contains a lot of useful information for people selling businesses and I am always happy to answer any questions that I can by phone or email.
Related Tag: Sell Business Gold Coast