Not a seasoned business owner in Adelaide, Australia? Well, you probably won’t know the ins and outs of selling a business. One thing about selling a business is to be confident and know your capacity. Hiring a business broker might be the best way forward when selling your business, but it’s possible to do it yourself. Here are some steps you’d need to take, with or without a broker.
Step 1: Have a valuation done
One of the first things a business broker would do with your business is to figure out its worth. This is called a business valuation. Some business brokers are licensed to do a valuation themselves, while others must hire another professional to do it.
A valuation looks at the business, including its assets, risks, liabilities, financials, operations, and other relevant information to determine its current market value. They use two methods: work out your EBITDA (earnings before interest, taxes, depreciation and amortisation), or comparable company analysis, where they compare your business at its current state to businesses that are similar or in a similar industry and how much they sold or can sell for.
Step 2: Ensure your financial records are up to date
This is generally one of the first things you would do as well, mainly because you would need to have most of your financials in order for the valuation. In addition to that, in many situations, potential investors may ask for your business’s financials when they offer a letter of intent to purchase to see whether buying your business is a wise investment for them or not.
Step 3: Consider the Tax ramifications
Depending on the size and structure of your business, there may be certain tax ramifications that you need to consider, too. For example, capital gains tax may be applied if you’re selling any assets. Usually, it would be wise to consult with your accountant regarding any tax implications you may have during the sale of your business, as this may contribute to your decision-making as you process the sale.
Step 4: Create a marketing plan for the business
Once your business is valued and your finances are in shape, it’s time to market it. Your broker will usually handle this, developing a strategy to attract buyers while keeping sensitive information confidential. This could include listing the business online, reaching out to their buyer network, or even discreetly advertising it within your industry. The goal is to generate interest without tipping off competitors or staff before the time is right.
Step 5: Define the sale terms
Before you start getting serious with potential buyers, you’ll want to specify the sale terms. This includes what you’re selling, the assets, shares, or both, and how much you want. Having clear terms will help you once you get to the negotiations phase.
Step 6: Negotiate with potential buyers
Once your terms are set, you can start accepting letters of intent to purchase and shortlist the potential buyers you want to consider. At this stage, your broker would usually negotiate on your behalf, working towards finding a beneficial agreement and price for both the seller and the buyer.
Step 7: Draw up a sales contract
If you accept any offers from the negotiations, you’ll both have to do due diligence as the purchase contract is drawn up and all the legalities are taken care of. The sales contract will include things like handover periods, warranties, asset lists, and payment timelines. It’s important that this contract is done properly so you’re protected legally and financially after the sale is complete.
Step 8: Finalise the settlement
This is the end of the process. When all the conditions have been met, funds are transferred, and the final handover obligations are done, the sale would officially be complete, and you would have sold your business. Keep in mind if you’re using a broker, they will take off a percentage of the total sales price of your business from the processed funds. In Australia, this is usually between 5% and 10%.
Find a business broker
Selling a business can be difficult, not merely because you need to market it right to get buyers, but also because you’ve invested years of your life into growing your business. That’s why having the right business broker in your corner is helpful. If you’re feeling this way, consider Adelaide business brokers. As professionals in Adelaide, they’ll manage your sale, considering what is first and foremost beneficial for you and your business.
Final thoughts
The sale of a business can be smooth sailing or highly complicated. It all comes down to your business and the circumstances around its sale. However, for most businesses, the sales process is the same. You’ll start with hiring a broker, having an evaluation done, tidying up your records, marketing the business, negotiating with buyers, and ultimately finalising the sale.
