Sell your Business
There are a number of factors to consider when selling your business, one of the most important things is figuring out for how much would you like to sell your business for.
Selling your business can be challenging, so it is very important to do it right. Listed below are some recommended steps to help you through the process.
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If you’re thinking of selling just because of financial problems or because it is hard for you to comply with government regulations, you should also consider getting professional help or advice that might just help your business to become a success.
You should also consider how selling your business will affect your personal and financial circumstances.
2. Deciding whether to hire brokers or professionals
It is a good idea to consider asking a reputable business broker or other professionals to help you in selling your business, because they can save you from all the processes that can be time consuming and complicated.
Business brokers are professionals who specialise in buying and selling businesses. They can help you understand legal and government requirements and make the process of selling your business easier and less stressful. Some services that are provided by these brokers may also not be as expensive as you think.
Since you will probably need to provide your broker or another professional with a whole lot of information they need about your business, it is very important make sure that you have checked all the credentials of these brokers or professionals to ensure that they’re highly reputable before using their services.
3. Determining the value of your business
Valuing your business is about figuring out how much your business is really worth so you can set the right price when you decide to sell it.
This may include assessing the value of your assets, estimating future profits and working out how much the goodwill that you have established is worth.
4. Finding buyers for your business
Here are some methods on how you can advertise the sale of your business to potential buyers:
- business brokers or real estate agents
- online advertising
- your existing networks (e.g. family, friends, or employees)
- advertising in the newspaper
- advertising in trade publications or using your industry contacts
- word of mouth
- notifying customers of your sale (as long as you’re confident it won’t harm your business if your customers know you’re looking to sell).
The way you advertise will depend on your business type, industry and contacts.
Check whether there are any requirements in your state or territory about what information you need to give potential buyers.
For example, if your business is in Victoria and is being sold for less than $350,000, you must provide a Vendor’s Statement (or Section 52 Statement) to all potential buyers. This statement gives recent financial information about the business and should be provided by your accountant.
5. Negotiating the sale
When negotiating the sale, make sure the information you are providing about your business is accurate and true. If you say anything or give information that is later found to be false, it may be considered misleading or a deceptive behaviour.
You’ll need to agree with the buyer on a range of things, including:
- the sale price
- the deposit amount (usually 10% of the sale price)
- the settlement period
- handover training (if any) for the buyer
- arrangements for existing staff.
You may need to compromise on some things to get the best outcome. For example, if you’re keen to settle quickly, you could encourage the buyer to agree to this by offering a lower sale price.
6. Prepare the contract
Generally, an intermediary draws up the sale contract (except in NSW where a solicitor does it). Most small business owners will ask a solicitor to review the contract, and the contract will also be checked by the buyer’s solicitor.
Solicitors should check that the contract doesn’t include any false statements, and covers all aspects of the sale, including:
- all the relevant assets that are being transferred, including property, equipment, fixtures, fittings, stock, and any rights to use any names
- all the relevant liabilities, including creditors (people or businesses that your business owes money to) and the lease of the business premises
- responsibility for employees and employee entitlements, including whether employees are to be transferred with the sale (if the new owner isn’t an ‘associated entity’ – related to the old business in some way – they don’t have to recognise some entitlements)
- statements about what will happen if any issues arise (for example, the buyer decides not to proceed, inaccuracies are discovered in the contract, etc)
- any restrictions on trading in your profession after the sale (to prevent you from competing directly against the new owner).
7. Take care of your employees
When you sell your business, your employees may either:
- transfer with the business to the new owner, or
- end employment with the business.
It’s important to communicate with your employees and let them know whether they’ll be transferring across to the new owner or ending their employment due to the sale of the business.
In both cases, a transfer of business ends an employee’s position with you, the former employer, so you must give your employees notice of ending employment or provide payment in lieu of notice.
When employees transfer with the business, you’ll need to give all relevant employee information to the new owner. There are some employee entitlements that the new owner must recognise and others that the new owner doesn’t have to recognise.
8. Deal with legal matters and tax implications of the sale
Consider any insurance requirements for your business, such as run-off cover (where you are insured for any legal claims that are made after you sell your business).
Also consider whether Capital Gains Tax (CGT) and Goods & Services Tax (GST) applies to the sale of your business. For example, if your business is registered for GST, you may need to include GST in the price of individual business assets or repay GST credits.
If you are selling a small business, CGT concessions may be available.
If you cannot pay your taxes on time, you may be able to get help through an ATO payment plan.
9. Transfer your business to the new owner
Once your business is sold, you’ll need to transfer your business to the new owner. This includes:
- transferring leases, licenses and permits
- finalising tax returns, activity statements and instalment notices
- cancelling your ABN and transferring or cancelling your business name.
10. Look after yourself
Selling your business can be an emotional time. After all, you’ve probably put in countless hours, money and energy.
It’s important to know that there is assistance available. These include:
The Department of Human Services can also offer employment and financial assistance.
Let Us Help You Sell Your Business
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Sell your commercial property or business privately without business brokers. We advertise your business for sale or real estate listing in our go-to website, national glossy Coast to Coast Magazine and major real estate websites reaching many motivated buyers. Call now to sell your business or property 1300 793 792 or email [email protected].