Selling A Business Is Stressful – Make Your Business More Attractive To Buyers To Reduce Your Stress.
Selling a business is likely to be one of the most important activities in your life. For many people it can be more significant than selling your house because of the size of the transaction and for most business sellers it is probably a rare and unknown event. Few people sell multiple businesses in their career.
You have worked hard to establish and grow your company and in most cases, the sale of the business is to fund your retirement. So what can you expect from the business sale process, how can you minimise the anxiety during that time, and how most importantly, can you maximise your sale price?
The Business Sale process
Business valuation
Firstly you will need a reliable business valuation. You cannot make an appraisal by looking at other businesses in your industry and making an adjustment based on the relative sizes. Plenty of people try that approach but the buyer’s accountant will probably undertake due diligence to look at the accounts, your systems and a range of other factors and come up with a counter offer that you will not find attractive. If you have a reasonable valuation to start with, you will be in a much stronger position and be able to speed up the sale time.
You also need to have a fair valuation of any goodwill in your business and be able to support your claim for that. So get a fair and reasonable business valuation.
Make sure your compliance and accounts are up to date
The next step is to make sure your books and audited accounts are up-to-date and that all compliance documents have been lodged with the IRD, Companies Office and taxes are paid. This will again speed up the due diligence process.
Minimise Cash leakages
To maximise your sale price it’s important to have your recent profits as high as possible so you need to stop “cash leakages” from your business. Typically, a dollar in profits is worth up to $4 in sale value. So manage the cash flowing out of the business as soon as possible. This could be your biggest profit stream.
Going to market
Once you have the compliance and accounts prepared to maximise the business valuation, you need to take your business to the market.
There are numerous ways to do this. Sometimes, we know of other clients who may be interested in acquiring businesses in your area or industry. We can make introductions for you.
A more common approach is to go to a business broker.
Be warned. Not all business brokers are the same. We can recommend some excellent business brokers that we have worked with over the years.
The N-word - Negotiation
When you receive offers for your business, this is the part that many people do not enjoy - having to negotiate the business sale price. Some people feel intimidated because it is a rare activity and so do not understand the different negotiating methods you can use, plus, the numbers can be quite significant.Cash and price are not the only factor when it comes to the sale value. We can help you put together attractive packages of support for the buyer, finance options or a myriad of other components to maximise the return for you without jeopardising the actual sale and making all sides feel they have a good outcome.
Drafting the sale documents and contracts
Once a suitable price and package has been agreed, we can draft the contracts, the Sale and Purchase Agreement and any other supporting documents. We will work with your lawyer to assist in the legal aspects of selling your business to minimise the disruption and speed up actual business transfer to the new owners.
So to make one of your biggest financial transactions as smooth and profitable as possible, selling a business, call for a free initial consultation, on 523 3800.
