So you want to sell your business?
Follow these 7 essential steps in selling your business:
1. Get the price right - if you are asking too much you won't get interest. If you are asking too little you won't be compensated for all of the sweat, tears, money, risk and everything else you have invested over the years. Speak to your accountant and speak to a business broker. They will be able to give you guidance in getting the price right. But as we all know, the market will determine the ultimate price you achieve in the sale of your business;
2. Get your finances in order - most business contracts have a due diligence period. That due diligence period will allow the buyer to delve deep into your business and will use their accountant and lawyer to assist them. They will want at least the last 3 years' of figures, access to your accounting software and so on;
3. Tie down your suppliers - if you have important supply arrangements make sure the documents are in place to ensure continued supply and exclusive supply (if possible). This might be one of the reasons the buyer wants your business. They will want to see the contracts to make sure they will continue to have the same supply agreements in place;
4. Tie down your customers - if you have big volume or repeat customers, the buyers wants them too. That is where the value of the business will be in many cases. If possible get some contracts in place or update the contracts to make sure the buyer will still supply those customers when they own the business;
5. Check your employee arrangements - make sure your employees are on the correct awards (if applicable), employee contracts are up to date, you have paid employee superannuation and all employee entitlements are accounted for. Employees can be important parts of a business. The buyer may be liable if you got things wrong, so don't let any nasty surprises shutter the deal;
6. Check your lease arrangements - find your lease, is it current? Do you need to exercise the option to renew during the contract period? The buyer may not want to complete the contract if the lease comes to an end soon after completion. Make sure you are not in breach, the landlord may not agree to an assignment of the lease if you are in breach;
7. Check your business structure - sometimes the ownership of the business can be all over the place for instance the individual owns the trade mark, the company owns the business and a related entity holds the lease. Make sure your business structure is correct and you have the correct entity entering into the contract. You don't want the contract to fall over because of a stupid mistake.
The Franchise & Business Lawyers have extensive experience in business sales and purchases. We can give you advice for your circumstances. You should seek advice for your specific circumstances as this blog is of a general nature and does not cover all aspects of a business sale.
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