Selling a business for whatever reason is not an easy task, especially when you are looking for a deal that takes the business for the value it is worth. The Australian market is promising, and with thorough preparation, the otherwise complicated process will be easier to handle. Here are some pointers that can help you sell a business in Australia without putting too much strain on you.
Preparing the business for the sale is the most important part of having an easy time finding the appropriate buyer and the most reasonable deal. So, where do you start?
- Outline your objectives and those for the business. When there is clarity about the objectives for each shareholder, together with the financial outcomes and intentions, you will know exactly which path to take with the sale. Whether you are a family business, a partnership, or a sole director, this is an important step.
- Clean up the house. This includes grooming the business financials, so stability and consistency are obvious in terms of profitability and revenue. It is also important to show that the business can run smoothly without over-relying on you, the owner. You can do this by presenting documented procedures and processes, paying debts, and ensuring your tax records with ATO are helping your net position.
Organized records and financial records that are up to date all fall under cleaning up your business so it is ready for sale. Cleaning up does not mean investing in the latest systems when you are about to sell; it is more about having all your ducks in a row and having the business as one smooth-running machine to give buyers confidence.
- Talk it out with your accountant or solicitor. When working closely with your accountant or technical advisor, you will have an easier time valuing the business and ensuring that everything that needs to be covered before the sale is indeed covered. Buyers will always be looking for clarity and confidence in the business, so you should be able to present it in such a way they get more than they anticipated.
When you put your business out there, you want to find all possible ways to optimize the pricing and the terms and conditions of the sale and complete the transaction within the time frame you have given yourself. What are some of the things you can do to complete the deal and get the best while at it?
- Keeping the business running through the sale period. This is one of the reasons you need to work with a professional advisor to come up with a selling process that minimizes disruption of business operations every day. You need to maintain consistent performance even when you are about to sell; it reassures the buyer about the investment they are about to make.
- Marketing the business thoroughly. According to businesssales.com.au, marketing is about everything you do and everything you don’t do. It covers tangible and intangible aspects of what the interested buyers will discover, see and learn about the business. If buyers will be visiting your physical location, it needs to be organized and clean to impact confidence visually. The access, parking, and exterior signage can also go a long way in boosting confidence in buyers.
If you are handling marketing campaigns online, all important information should be included in the adverts, so there is little to enquire about. Detailed information covering all key areas of your business gives buyers what they need in reviewing and considering the sale. The sooner buyers discover the business, the easier it will be for them to decide and make you an offer.
- Help buyers mitigate business risk. When looking at the terms and pricing, buyers will also check the risks involved in the acquisition. Transparency should be your guide in this because it improves the outcome. Be open enough when giving an overview of the business’ performance and history. Most sellers make the mistake of hiding their weaknesses and problems, destroying trust when the buyers later uncover the truth. Find a way of softly selling the weaknesses as strengths for improving the business rather than hiding them away.
- Stay open-minded with negotiations. Negotiations can be complex because they involve gives and takes from both sides. With your goals well set, stay focused on them but be flexible and open-minded about achieving them. Staying flexible with the negotiations will make finding common ground with the buyer easier, so you have pricing, structure, and terms you agree with.
- Know the buyer. This is an extension of transparency during the selling period. Learn as much as possible about the buyer, their history, experience, and skills, so you can share business aspects they can relate with. When the buyer relates with the business, they will be more comfortable and can even adapt their skills to improve on the issues and weaknesses. Find an organic discussion to learn more about the buyer; things like hobbies, family, and where they live can help you connect with them easily, managing the process smoothly.
After you have done everything to complete the deal, do not leave things hanging. You need to push the deal to the point of closing and exiting.
- Ask the buyer to make an offer. Feel free to push for offer feedback and commitment. The sale should be a transition and should be done while everything is still fresh in the buyer’s mind. Do not give the buyer time to forget what matters most in the acquisition; keep the communication running until you close the deal.
- Hand over the business with confidence. After the settlement is complete, help the buyer have an easy time taking over. You can create a hand-over period, so continuity is flawless. Chances are the buyer will be keeping your staff, and you need to help them ease up to the new management. There right time for you to exit the business will be when the buyer has gained enough confidence to take over the reins and has familiarized themself with every aspect of the business. Make sure you both agree on your exit plan.