Sell a Business
The 6 Steps To Selling Your Business
Deciding To Sell (or not?)
The very first question to ask yourself. when preparing or thinking about selling is “Do I REALLY want to sell ?”. Am I committed to the process ?
If you are genuinely engaged and ready to commit to selling your business, seeking early advice from your broker, accountant, and solicitor can avoid costly mistakes being made that could affect the outcome or kill the deal altogether.
We have the skills and systems in place to guide you in preparing to sell the business.
Value Your Business
Sellers need to understand how businesses are valued.
Business Value= Profit x Selling Multiple of the Profit
Maximizing profit maximizes business value.
Our ‘Ready For Sale’ strategies often increase the profit by removing surplus assets including equipment and stock, tightening debt collection on the Balance Sheet, and other recommendations.
(More on ‘Ready For Sale’ strategies in Point 4 ‘Preparing to Sell‘.)
Appoint A Broker
Selling a business can be a long, daunting experience.
While many business owners have years of experience running a business they may have not bought or sold a business.
Appointing the right broker brings someone onboard who can help guide you through the sales process.
The role of your broker is to qualify prospective buyers and act on your behalf in speaking to interested parties. This can be time consuming and involved and is one of the key reasons to appoint someone who is qualified and knows what they are doing.
Appointing the right broker actually saves you time and money because you can continue working IN the business, while your broker works with you ON selling your business.
Sell A Business are certified practicing members of the Aust. Institute of Business Brokers (AIBB) where we receive ongoing training, support, and industry updates that qualify us to get the deal done …. for you.
Preparing To Sell
This process may start 1-2 years before you actually go on the market.
In Point No 2 (Value Your Business) we mentioned ‘Ready For Sale’ strategies which enable the business to appear more attractive to buyers. Key strategies in preparing and being ready for sale include:
- Reason for Sale
- Timing of the Sale
- Business Valuation Methodology
- Document Preparation
Have A Marketing Plan
A solid marketing plan will let potential buyers know that your business is for sale, and how to make contact.
Your listing needs to have strategies in place to ensure highly, targeted exposure to as many potential buyers as possible.
We know how to market businesses – using multiple platforms including affiliate marketing websites (and our website), social media, and our database of buyers, past sellers, accountants, solicitors, and business advisory groups.
Here Come The Buyers
Buyers will start contacting us about the business and looking for more information.
This is a critical stage where a lot of time can be wasted if the buyers aren’t qualified. By that we mean a lot of buyers don’t really know what they want – they are ‘lookers’ and comparing opportunities.
The experienced broker will pick this up quickly by the way the buyer speaks and acts. While buyers are judging our business opportunity, we, as your broker, are also judging them on their commitment and financial capacity to buy the business.
Your broker must have the skills and training to handle buyer enquiry professionally and efficiently.
Once a genuine, committed buyer is found there is usually a series of negotiations as to the actual price and what’s included in the sale. We perform this working closely with you, your solicitor, and accountant.
Once terms, conditions and price have been agreed a draft contract is drawn up – often by the seller’s solicitor.
Many sellers think once a contract is signed and the deposit has been paid, the business is sold – but its just the start. As your broker we start the process of ensuring all the clauses and special conditions of the contract are satisfied – on time ! The contract then becomes an UNCONDITIONAL transaction and ready for settlement on the completion date in the contract.
The 3 Professionals That Will Help You The Most
Qualified Business Broker
Accountant / Financial Advisor
Successful Sale of Your Business
The Role Of The Seller – That’s You !
The seller’s role is to continue to work IN the business, while the business broker works ON selling the business.
You’ve appointed a broker to assist you in determining price, how to find buyers, how to deal with buyers, create a marketing document, and a myriad of other tasks. Here’s a quick checklist of the role of the seller, some of which were mentioned briefly earlier in this document;
Each business is different in size and the way it operates, and the amount of information required varies. We will advise you on what is required and collate the information and data into working documents that will provide information required by buyers in a professional, concise, easy to follow presentation.
Its also worth mentioning now that information provided to buyers is done so after the potential buyer signs and returns to us a Confidentiality Agreement – we advise you of who the potential buyer is, and seek your approval before dispatching information to the buyer.
The Role Of The Business Broker
- Gather all the information and data together to establish what we are selling, and get the business ready for sale.
- Liaise with the seller, the accountant, and solicitor, to agree on value, the asking price, and selling plan strategies.
- Put in place a marketing plan to attract qualified buyers
- Present information to buyers in a professional way (under Confidentiality Agreement)
- Find the qualified buyer who is interested in buying the business, and negotiate the terms and conditions of sale.
- Assist with contract preparation in co-operation with the seller’s solicitor and accountant.
- Satisfy all clauses and special conditions of the contract to enable the deal to become unconditional and settle …. on time.
How Long Will It Take To Sell ?
Selling a business is not like selling a house – that’s why real estate agents sell houses, and business brokers sell businesses.
A real estate agent may take 45-60 days to sell a house, but businesses are more complex.
No two businesses are the same, there’s always a lot to consider.
We can tell you the businesses that are moving (and those that aren’t), and a price guide of historical sales and returns.
Obtaining data on how long it takes to sell a business is hard. Prepare to wait a few months, even up to a year to find the right buyer.