Selling your business in Sydney is uncharted territory for most. Between the paperwork, negotiations, and still running the business, it can all get a bit overwhelming, so it’s always advisable to get a hold of a business broker to make sure everything about your business sale runs smoothly. However, even with a professional business broker on your side, it’s good to be aware of what to expect when selling.
To help you understand more about how the process of selling your business should work, we’ve put together some steps to follow when to help you feel more at ease and know what to look out for.
1. Identify why you’re selling
The first thing you’ve got to handle is why you’re selling your business. There are many reasons why you would want to sell, including retirement, a means of solving partnership disputes, maybe you’re overworked or fallen ill, or maybe you just need the cash. Understanding why you’re selling is a great way to keep up the motivation for both you and your business broker.
2. Determine whether your business is profitable
In addition to identifying why you want to sell, it is important to know whether or not it will be a profitable sale. Sometimes, it’s necessary to sell even when you know it won’t be profitable, but you always need to weigh it up. Businesses that are not profitable are generally less attractive to buyers and tend to be on the market for longer. Here are some factors you can work on to make your business more attractive to potential buyers:
- Aim to increase the profit margin
- Work on building consistent income figures
- Build up a strong customer and client base
3. Hire a business broker
Leaving the sale up to the professionals and hiring a Sydney-based business brokerage company will allow you to save time, money, and effort that could be spent elsewhere that can aid the sale. Experienced business brokers will be able to give you a realistic valuation of your business as well as tell you how to improve its value, find potential buyers, assist with writing up initial legal paperwork, and so much more. When you’re looking for a good business broker, you want to ensure that they:
- Have relevant experience with selling businesses that are similar to yours
- Have a good track record of selling businesses
- Are working as a broker full-time, so you’re assured they’re professional and will devote their time to the sale of your business
- Do not have a large listing of business they are selling; between 15 to 20 listings is a good number as this shows they approach the sale intentionally
- Have policies in place to ensure the confidentiality of your business sale
4. Prepare all the essential documents
Along with your accountant, business broker and lawyer, you’ll need to get all the necessary documents ready for your business sale. This includes gathering all your financial statements from as far back as three to four years, as potential buyers will want to see all the details of your assets, liabilities, income and tax returns.
While your business broker can help set up the initial drafts for the sale, always have an independent legal team look over the details of any legal documents to ensure everything is in order.
5. Time the sale right
When you’re working with an experienced business broker, they’ll tell you just how important timing is with your sale. You can’t just dive in, but you need to be calculated when you put your business up for sale, or you might not get the return you were hoping for.
Ideally, you need to be preparing for your sale a year to four years in advance, as potential buyers will want to look at financial records, your customer base and business structure to see if it’s worth buying. The more time you have to make your business look as attractive as possible, the faster the sale is likely to happen. You also need to consider the trends of the market you’re in and decide whether or not it’s worth selling for you.
6. Negotiate with potential buyers and close the sale
Once your business has been put up for sale, and you and your business broker have done the marketing and got a few interested buyers, it’s time to negotiate. Negotiations can take a while to get to the final sign-over, so be patient and work closely with your lawyers and brokers to ensure you close the deal well.
Final Thoughts
No business sale is exactly the same. You might hire a business broker who suggests a ton of changes to your business to ensure that it sells for a higher price, but this might require more work. Or, you might be able to sell your business as is. Either way, by following these steps, you’ll be able to successfully navigate your business’s sales.
