- Posted by BWA Accountants
Considering Selling Your Business?
Selling a business can be a complex and new
process for both vendors and purchasers. Many business owners may not know
where or when to begin when putting their business on the market.
The reasons for selling may be diverse
however simply putting up a for-sale sign is not enough in the increasingly
competitive business world.
following areas are critical when undertaking the sales process and beginning
the next phase of your business cycle.
PREPARING YOUR BUSINESS FOR SALE
If selling your business is on the horizon, it may be
worth considering what is needed in preparation not only for a potential sale,
but to achieve the highest possible value.
Getting your house in
The key to being ready to sell is to have your business
running at its optimal level of efficiency, effectiveness and most importantly
- at its most profitable.
Essential ways to achieve your business running at its
highest possible level include:
Improve cost efficiencies - Are
all costs incurred through operating necessary and at the best price? Can an
alternative be sought to control and potentially reduce overall expenses?
Evaluate internal financial processes
and controls - Ensuring your business can prepare accurate
and informative Financial Statements along with the ability to produce timely
reporting when needed will assist with attracting prospective buyers.
Assess your business through the eyes of
a potential buyer - This can be done by running an internal
diagnostic check for your business. What improvements can you make now to avoid
corrective action in the future which could lower your sale price?
my business run without me?
important aspect a potential buyer will consider is the ability of your
business to operate without your presence or influence. It is essential your
business has a management structure and stakeholder network which allows for a
new owner to step in and run the business seamlessly. Consider the following
steps to prepare your business for life without you.
Formalise systems and
day-to-day processes -
Written instructions can be put in place to ensure potential new management
could step in with ease.
your customer and supplier base -
Ensure your business is not reliant on a narrow customer network or
supply-chain. Expanding your market share can make your business more
Take the opportunity to
formalise and review employee agreements and contracts - The people within your business are
important assets which could increase the perceived value of your business.
these steps ensures your business is always ready for sale when the opportunity
SEEK PROFESSIONAL ACCOUNTING
& LEGAL ADVICE
buyers will seek to examine the previous, current and future financial
performance of the business. Drilling down on the details of gross profit
margins, trends and forecast cashflows are areas your trusted business advisor
can assist in preparing your business for sale.
will always be an element of uncertainty when purchasing the future cash flows
of a business, however any buyer will be looking to minimise their risk
exposure. Providing forecasts that are achievable and realistic, which are based
on past trends and current market considerations will ensure buyer confidence
in the value of your business.
Capital, why is it important?
the sale of your business the buyer will require a level of working capital to
fund the day-to-day business operations. Poorly managed working capital levels
can impact the final sale proceeds you ultimately receive. Taking the time and
seeking the guidance to manage cashflows and lower liabilities can reduce the
expected working capital level required in your favour.
Accountants + Business Advisors along with your legal advisors can provide
value by offering their expertise and working together to achieve the best
outcome for you.
NEGOTIATE & CLOSE THE
negotiation process is usually associated with conflict, rather than two
parties working together towards a mutually beneficial gain. Planning for the
negotiation and being clear about the outcome can make the whole process less
complicated, ultimately making the process straightforward for you and your
into negotiations with a figure you would be prepared to accept, however always
have a plan B. Price is not the only aspect of an offer. If you are not able to
meet the terms and conditions associated with the highest priced offer, a lower
offer with more achievable terms and conditions might be more favourable.
be afraid to walk away, deals are about compromise! If negotiations have halted
it might be time for both parties to reassess what they are looking to achieve.
Reflecting on what could have been accomplished may prove helpful which could
lead to fresh negotiations.
BWA has assisted with the sales of numerous businesses including sales to ASX listed companies. Please click here to find out more.
If you are considering selling your
business or would like to discuss preparing your business for sale, please do
not hesitate to contact our friendly team.