How to sell a business
Thinking about selling your business? There’s no denying it’s a huge decision to make, and there are so many aspects to consider. Negotiating the price is obviously a crucial factor, but ensuring you have all the documentation, contracts and other information correctly collated is also essential.
Having a conveyancer on board to help you through the process, whether you are the purchaser or vendor, can help simplify the process and ensure all requirements are adequately met.
Let’s take a look at how the process works.
- Decide what you want to sell
Do you want to sell off the business and all its assets in its entirety? Do you want to sell off the registered name? Do you want to keep the property the business owns? Making these decisions early on will help with the following steps.
- Value your business
There are a whole variety of methods you can use to calculate the value of your business. While it may be useful to get a professional to do this for you, if you can’t afford to it can also be done yourself. We suggest visiting the Government’s Business website to find out more.
- Prepare all the required documentation
This is where we come in and can help to ensure that everything relating to your business and its day-to-day operation is in order. This includes financial documentation, legal information, business information, procedures and plans, and information relating to staff, suppliers and customers.
- Find interested buyers
How easy it is to find a buyer for your business will depend on the industry you’re in. You may choose to use a professional such as a business broker to help find a buyer, but you can also choose to just advertise it to your existing networks, on websites such as Seek Business, in your local newspaper, or simply spread the word to your existing database.
- Negotiate the sale
Once you’ve found a buyer, it is time to negotiate all the ins and outs of the sale. Things to discuss and agree on include:
- The sale price
- The deposit amount
- The settlement period
- Any handover requirements
- Arrangements for existing staff.
During the negotiations the purchaser may come back with some amendments to proposed terms, which you will need to deliberate and make a decision on. Compromise is sometimes a necessary component to negotiating a sale.
- Prepare the contract & Form 2
Use a professional, such as a conveyancer, to prepare the sale contract. The contract should be 100% accurate and cover all aspects of the sale, such as relevant assets and liabilities, employee entitlements, trading restrictions and much more. Due to the complex nature of a contract, it is important to at least ensure a professional checks over it once it has been prepared. If you’re selling a business for less than $300,000, you will also need to enlist the services of an accountant to assist you with the preparation of a Form 2. This statutory form compiles things like trading statements, depreciated value of equipment and a summary of the financial performance.
- Ensure you’re aware of any tax or legal requirements from the sale
When selling a business, there are plenty of potential tax implications to consider, including whether Capital Gains Tax and GST applies. More information on this can be found on the ATO website.
You may also require things like insurance to cover you for any legal claims that might be made after the ownership has been transferred. A professional will be able to provide advice on the types on insurances you require.
- Transfer the business to the new owner
Once the contract has been signed and the sale of the business is official, the business needs to be officially transferred over to the new owner with the assistance of a conveyancer. They will take care of all aspects of this, including transferring the name, transferring any relevant assets, leases, licenses and permits, and finalising any other elements of the contract.
Once all elements of the contract have been satisfied the settlement is complete and you can celebrate the successful sale of your business!
If you’re considering selling your business in the near future, please don’t hesitate to contact us for pre-sale advice. We’ve been in the industry for more than 20 years and have helped with many successful business sales over the years!