Selling A Business

The time to start thinking about selling your business was when you first bought or started the business.

It’s a natural progression that is the main focus of growing the business.

Every growth decision should have selling in mind as you structure the business. This will maximise the value of the business.

A business that doesn’t need your presence to turn a profit is a lot more valuable than one in which you are still the major player. Every day you should ask questions while sitting and working in your business.

Can this business run without me? What assets have I got to sell?  Are my business systems worth anything to my competitors? What is my business worth?

Now you should prepare the sale at least 3 years in advance. What? Don’t know when you want to sell?  You need to be prepared in advance.

Ok now our accountants will guide you through the process , but to get the best price you have to be realistic as well. The old saying “you can’t have your cake and eat it “ really holds true here.

To maximise the amount you receive on a sale, and also maximise the amount of the sale price you can retain begins with good preparation.

Selling a business requires financials that accurately reflect the position of the company and justifies your asking price. If a purchaser has to ask for clarification on a variety of issues or some transactions can’t be adequately explained then they will be less likely to go ahead with the purchase. They will probably use the confusion to justify requesting a discounting in the price.

Using our bookkeeping service, BAS preparation service and tax return preparation service will ensure that your financials are accurate and will be ready for a potential vendor.

Just a couple of indicators of the types of things that will need to be done are:


Like a bit of cash to treat yourself? Nobody wants to know about your little black book. Banks won’t lend on it and Buyers won’t buy on it. You force them to make a choice. Are you lying to the tax office or the buyer?  If you lie about that then what else are you lying about. Keeping the cake( getting a higher sale price) while eating it ( keeping the cash) doesn’t work.

Push you prices up for a couple of years before selling , trim all contracts for telephone , internet , advertising etc. Keep tight reign on wages , and ensure no personal expenses are run through the business. Have a fire sale on old stock. Tidy up business premises , keep it painted and staff looking smart.

This is the stuff we do through the years. Clear out all old loans , bank accounts and anything that clutters up the balance sheet or may raise queries.

The buyer will go through a due diligence. Be smart and do one before putting the business up for sale. This will raise any questions the buyers are likely to have and you will have the answers before they ask the questions. This shows a well run business and avoids any delays in sealing the deal.

You need the solicitor and you need us and other specialists to make the sale. You may have tax and GST on the sale proceeds.

You are asking these specialists to structure the sale the best way possible so you maximise the price and minimise the tax outlaid.

Have a look at the cost compared to the benefit and satisfy yourself that you see value.

It’s pointless selling the business on your own and then complaining because of the tax owing. Again plan the sale well in advance so you have no unpleasant surprises.

 

Bookkeeping Due Diligence Tax Planning Small Business Entity Concessions