Published on 24/02/2017 by Punchmedia

You've Decided to Sell Your Business - What Next?

There are a number of factors to consider when selling your business, one of the most important being how much you would like to sell your business for.

Selling your business can be a challenging task, so it's important to get it right. Here are some suggested steps to guide you through the process.

1. Make sure selling is the right decision

If you're thinking of selling because of financial problems or because you find it hard to comply with government regulations, consider whether getting help or advice might put your business back on track.

You'll also need to consider how selling your business will affect your personal and financial circumstances.

Make sure you've considered everything when considering selling your business - check out our article for assistance.

2. Decide whether to use professionals

Consider using a reputable business broker or other professionals to help you sell your business, because the process can be time consuming and complicated.

Business brokers are professionals who specialise in buying and selling businesses. They can help you understand legal and government requirements and make the process of selling your business less stressful. The services of a broker may also not be as expensive as you think. Find out more by searching Business Brokers here.

As you'll need to provide your broker or other professional with quite a lot of information about your business, make sure you check the professional's credentials to ensure they're reputable before using their services.

3. Value your business

Valuing your business is about working out how much your business is worth so you can set the right price when selling.

Read value your business for some common methods of working out the value of a business. This may include assessing the value of your assets, estimating future profits and working out how much the goodwill that you have established is worth.

4. Find buyers for your business

You can advertise the sale of your business to potential buyers through a number of methods, including:

• business brokers or real estate agents
• advertising online
• your existing networks (e.g. family, friends, or employees)
• advertising in the newspaper
• advertising in trade publications or using your industry contacts
• word of mouth
• notifying customers of your sale (as long as you're confident it won't harm your business if your customers know you're looking to sell).

The way you advertise will depend on your business type, industry and contacts.

Check whether there are any requirements in your state or territory about what information you need to give potential buyers.

For example, if your business is in Victoria and is being sold for less than $350,000, you must provide a Vendor's Statement (or Section 52 Statement) to all potential buyers. This statement gives recent financial information about the business and should be provided by your accountant.

5. Negotiate the sale

When negotiating the sale, make sure the information you give about your business is accurate and true. If you say anything or provide information that is later found to be untrue, it may be considered misleading or deceptive behaviour.

You'll need to agree with the buyer on a range of things, including:

• the sale price
• the deposit amount (usually 10% of the sale price)
• the settlement period
• handover training (if any) for the buyer
• arrangements for existing staff.

You may need to compromise on some things to get the best outcome. For example, if you're keen to settle quickly, you could encourage the buyer to agree to this by offering a lower sale price.

6. Prepare the contract

Generally, an intermediary draws up the sale contract (except in NSW where a solicitor does it). Most small business owners will ask a solicitor to review the contract, and the contract will also be checked by the buyer's solicitor.

Solicitors should check that the contract doesn't include any false statements, and covers all aspects of the sale, including:

• all the relevant assets that are being transferred, including property, equipment, fixtures, fittings, stock, and any rights to use any names
• all the relevant liabilities, including creditors (people or businesses that your business owes money to) and the lease of the business premises
• responsibility for employees and employee entitlements, including whether employees are to be transferred with the sale (if the new owner isn't an 'associated entity' - related to the old business in some way - they don't have to recognise some entitlements)
• statements about what will happen if any issues arise (for example, the buyer decides not to proceed, inaccuracies are discovered in the contract, etc)
• any restrictions on trading in your profession after the sale (to prevent you from competing directly against the new owner).

Find out more about documentation when selling a business.

7. Take care of your employees

When you sell your business, your employees may either:

• transfer with the business to the new owner, or
• end employment with the business.

It's important to communicate with your employees and let them know whether they'll be transferring across to the new owner or ending their employment due to the sale of the business.

In both cases, a transfer of business ends an employee's position with you, the former employer, so you must give your employees notice of ending employment or provide payment in lieu of notice.

When employees transfer with the business, you'll need to give all relevant employee information to the new owner. There are some employee entitlements that the new owner must recognise and others that the new owner doesn't have to recognise.

8. Deal with legal matters and tax implications of the sale

Consider any insurance requirements for your business, such as run-off cover (where you are insured for any legal claims that are made after you sell your business).

Also consider whether Capital Gains Tax (CGT) and Goods & Services Tax (GST) applies to the sale of your business. For example, if your business is registered for GST, you may need to include GST in the price of individual business assets or repay GST credits.

If you are selling a small business, CGT concessions may be available.

If you cannot pay your taxes on time, you may be able to get help through an ATO payment plan.

Find out more about taxes when selling your business on the ATO website.

9. Transfer your business to the new owner

Once your business is sold, you'll need to transfer your business to the new owner. This includes:

• transferring leases, licenses and permits
• finalising tax returns, activity statements and instalment notices
• cancelling your ABN and transferring or cancelling your business name.

Find out more about what you need to do when changing ownership of your business.

10. Look after yourself

Selling your business can be an emotional time. After all, you've probably put in countless hours, money and energy.

It's important to know that there is assistance available. These include:

• financial advice through the MoneySmart website, to help you take care of yourself financially
• career advice through the myfuture website if you're looking for a new career direction
• employment assistance through Australian JobSearch, if you're looking to find a job.

The Department of Human Services can also offer employment and financial assistance.

* Information sourced from www.business.gov.au

punchmedia

Curtis is a leading expert in the business-for-sale industry, serving as a senior content creator at anybusiness.com.au.

With a career spanning over fifteen years, Curtis has accumulated extensive knowledge in the domain of business sales, acquisitions, and valuations. His deep understanding of market dynamics and his ability to translate complex industry jargon into accessible insights make him a trusted resource for entrepreneurs and business owners looking to buy or sell businesses.

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