Questions About Selling

When a buyer indicates they want to make an offer, this needs to be in writing and in the correct format.  Any verbal offers can become complicated, as they do not detail the terms and conditions of the offer.  As part of our service we prepare a Sale and Purchase Agreement which details the offer being made, and the terms and conditions.  We will liaise between both parties in the process of negotiation to facilitate agreement between both parties.  In many situations we can recommend solutions to issues that may be of concern to either party.  As a business owner you need to ensure you are protected by having the right clauses in the agreement and it is advisable to seek professional advice. 

Most business owners want the sale of their business handled confidentially.  For commercial reasons they don't want their competitors and suppliers to know they are selling.  Once again this is the advantage of using a specialist business broker.  We work with potential buyers through the various stages and you only meet with them at the final stages of the process.  This leaves you to get on with business and keeps buyers away from calling or visiting you at work.

We will prepare a comprehensive marketing plan for your business incorporating notes on how to present the business, a detailed Information Memorandum prepared by us, advertising schedule and website and database marketing.  In many cases we find buyers from our database of qualified buyers.  If confidentiality is required, any advertising is of a generic nature and never identifies the particular business. 

This will vary depending on the complexity of the business and the industry.  Normally, if all the information is available and the business is priced relative to the market for that type of business a sale should be concluded within 12-26 weeks.

Have all the information required ready and current.  Buyers want to know what is happening in the business currently along with any existing or future trends.  Have your accountant prepare up to date financial information. 

We prepare a comprehensive Information Memorandum on your business. This will typically include:

1. Background of the business, highlighting opportunities for a buyer and the reasons for the sale. 
2. The sale process and description of assets etc. 
3. The historical financials, trading to date and comment.
4. The business valuation appraisal. 
5. Operational matters. 
6. Information on premises, including details of lease. 
7. Appendices including marketing material, plant and equipment schedule, etc.

This is prepared in draft format first for approval by the vendor. 

It is important that you have all the right information and details available before you start to market the business. A business well prepared for sale will sell more quickly.

As part of our service we will assist you in the preparation of this information and once again it needs to be presented in the right way with the right information. This information is also required to establish the selling price for the business and certain calculations need to be made to work out the true net profit of the business. Items you should have available are:

1. Profit and Loss accounts from the previous 2 to 4 years.
2. Identify and quantify abnormal and/or non-recurring costs in accounts.
3. Identify all items of personal and drawings nature.
4. Copies of internal accounting reports for year to date and/or GST returns if available.
5. Copy of the Lease.
6. Brochures or information on your product or service.
7. Background on the business.
8. Staff details.
9. List of plant and equipment and any equipment leases.
10. Copy of franchise agreement if a franchise business.

Like many small business owners you will probably have to search out these items and some may need to be updated.  Make sure the financial information is current and accurate.  If you're selling half way through the year you could get your accountant to prepare half-year accounts for the purpose of selling. 

This is a very important aspect of selling your business and probably the most contentious.  There will be many views on what constitutes value.  Sellers will have one view, buyers another, accountants another, etc.  There are multitudes of formulations, all of which produce different figures depending on who you're talking to. 

It is important to recognize the price range your business is likely to sell in. If you're unrealistic it won't sell and you and likely buyers will become very frustrated. You could also be harming the prospects of a sale sometime in the future.  If you're too low, then obviously you miss out or create suspicion.

Businesses sell in an open market that is with a willing buyer and a willing seller.  The market determines the price – the true value.

When we meet with you we will gather detailed information on your business and then present you with a Market Appraisal.  This gives you the price range we expect your business to sell for on the open market.  This is not a valuation and cannot be used for that purpose.

Click here to see Video Tutorials of Appraisal Methods

For a formal valuation appraisal and opinion, many business owners use LINK to have a written opinion prepared on their business and establish the price range. This is useful in the case of one partner wanting to buy out the other partners, a management buyout or valuation for family estate planning.  

We will schedule a meeting to discuss the specifics of your business and your personal plans for exiting from it. With our experience in business sales we can prepare an exit strategy for you, taking into account factors that will be instrumental in finding the right buyer at the right price for your business.

After we have an understanding of your business we will make suggestions on strategies that may be of benefit to you in the preparation of your business for sale. Buyers will be looking for certain things when considering your business and our recommendations can make the difference in effecting a quicker sale at a better price.