Selling a business can be challenging. But when managed well, and with adequate preparation and diligence, the sale of a business can be a positive and even life-changing event.
A poor business sale can drain time and resources. It may even end up being a negative experience that causes financial strain and other complications for the business owner. It is important to therefore have a good idea of what to expect so that you can face challenges as they arise.
It is also vital to have your business ready for sale and to make sure you have got your business to a point where it is an attractive prospect for a would-be buyer. When you are sure that selling your business is the right decision, you need to take some key steps before meeting with any prospective buyers.
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One of the first things that a prospective buyer will want to look at is the financial aspects of your business. A buyer is going to want to see:
There will likely be a lot of information to compile, so before you even consider advertising your business for sale, bring this information together by performing a financial inventory.
This will make matters straightforward when you are looking to engage in negotiations with prospective buyers. It is also important that you create an inventory of your assets so that you know what plant and equipment you have to include or exclude from the sale price.
You may be selling your business with everything included, or you might be choosing to keep certain items for other use or sale. No matter what, you need to perform a full inventory of all possible assets that will be included and excluded in the sale of your business.
You may also have existing debtors. The new business owner may be happy to buy these debtors. If this is the case, you will need to outline a method of valuing your debtors and what sort of transfer will take place.
Along with your asset inventory, you may also need to consider whether the new business owner will require a period of time in which the seller will remain on-site to educate them in operating the business. This can be outlined in your sale of business contract but is also something to consider prior to selling.
It is vital that you inform your staff as soon as possible about your intention to sell your business. If you do not inform them promptly, they may find out through other means and think that you intend to sell the business out from underneath them. This can then cause problems with employee loyalty and satisfaction.
If you are selling your business and the new owner wishes to keep all current staff, you should inform your staff wherever possible about your actions.
Also, if you have any current supply contracts you are obliged to fulfil, inform your clients or customers of the upcoming sale and work out how the new owner will continue to meet these obligations.
A business owner looking to sell may need to prepare a Section 52 statement. This is required when a small business is being sold where the goodwill, plant, equipment and fittings are being sold for a total price of less than $350,000.00.
You can read more about a Section 52 here, and find out whether your business needs one.
At Conveyancing.com we have helped countless business owners achieve a successful sale. When you have ticked off what you think you need from your sale of business checklist, call us to make sure that nothing is overlooked. We can ensure that the documents you need to sell a business are all in order for your peace of mind.
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