Personal tools
You are here: Home Business Sales Division Selling a Business

Selling a Business

Why Sell?

The decision to sell a business is often a hard one because of the profound personal and financial impact. Many diverse factors bring business owners to the decision to sell, including:

  • Troublesome exposure to business risks often aggravated by personal guarantee on loans.
  • Possible breakdown of the business due to the serious illness or disability of one or more of the owners
  • Personal preference of the owner/s to retire.
  • Lack of desire on the part of the owner's family to take over the business.
  • Divorce or ending of partnership.
  • Owner's desire to pursue other business interests which may be more challenging or less stressful.
  • Lack of adequate working capital.
  • A need within the company for new skills, new resources, or a new way of life to cope with ever changing economic forces, government regulations, and competition.

These valid reasons (and many others) do not mean either failure or the owner's willingness to accept less than a just price for the business.

How much is the business worth?

A business enterprise, like any asset, is worth what a buyer is willing to pay.

Buyers ask numerous questions, but they are primarily concerned with a fair return on their total investment. In addition, prospective buyers make many judgments about market position, proprietary know-how, competitive strengths, quality of the assets, development potential, and risks of the business.

To accurately determine the true worth of a business, the company's accounting reports, prepared primarily for tax purposes, must be restated to reflect the true financial performance of the business.

Liddiard Real Estate helps the business owner determine the true value of the business and, most importantly, can help potential buyers understand the reasons for such value and structure a sale for the maximum benefit of buyer and seller.

Just keep in mind you will get more for your business if...

  • You offer to facilitate a smooth changeover of the business
  • You co-operate by providing full and frank disclosure about the financial state of the business.
  • Your business is fully prepared for sale.

Confidentiality

Sound working relations with employees, customers, suppliers and bankers are important factors to a business. Any premature indication of a possible change in ownership could upset these relations and weaken the business' competitive position. For these reasons, and many others, confidentiality is critically important at all stages. With the proper procedures, it is possible to minimise the risk of an untimely disclosure.

In every transaction there is an appropriate time to reveal that a sale may be imminent. Proper timing of such sensitive announcements can contribute to a smooth transaction and reinforce the buyer's willingness to proceed to completion.

Liddiard Real Estate Services helps to make sure that information is kept confidential throughout the entire selling process until it is suitable to reveal that a sale is imminent. And no prospect will see sensitive information about your business until contracts have been exchanged and the deal is sealed.

When Is The Best Time To Sell

Usually the best time to obtain the highest price occurs when sales and earnings are good and trending upward. A firm earnings trend will enable a buyer to pay a higher price and still meet his return-on-investment criteria. A history of good performance also gives the buyer assurance in projected future earnings.

However, market conditions for business sales also significantly affect the saleability of a business. Today's market is the best we have seen in the last five years due to a large number of serious buyers in the market, readily available bank financing and the recent reduction in capital gain taxes which nets the owner more cash at settlement. Buyer demand is making the ownership of Small Business attractive again. The Federal Government of Australia has elevated the status of small business in Australia by giving the portfolio to a senior Minister, and devoting considerable resources to improve the lot of small business.

It is wise to prepare a business for sale so that optimum price can be obtained.

Who would Buy It?

For most companies, there are numerous categories of prospective buyers. The most obvious are other companies in the same business for whom the acquisition would be a logical expansion with potential economies of scale. Consideration should also be given to suppliers and customers of the business.

However, based on our experience in selling, approximately 75% of prospective buyers are individuals who want to be in charge of their own future. A fair number of these will have been retrenched and be fulfilling a lifelong dream of shifting from employment to running their own business. They will consider retail, service, wholesale or manufacturing businesses.

Liddiard Real Estate is in constant contact with all categories of buyers. We utilise effective search procedures to find and screen those who are best qualified to buy.

Why use a broker

Liddiard Real Estate CAN help! By using our experience and know-how gained from numerous business sales, we can guide you through all of the complex steps necessary to sell a business. The first step will be our review of the business' history and your objectives to make sure that a sale is the best course of action. This review includes an opinion of a range of selling prices of the business in today's market.

If you decide to proceed with the sale of the business, Liddiard Real Estate Services then prepares a detailed information kit on your business, develops buyer prospect lists from its contact files and other resources, makes the proper approaches and screens the buyer prospects, and introduces to you only serious, qualified buyers.

Liddiard Real Estate Services will handle the entire transaction from the initial introduction of the buyer through settlement, including co-ordination with lawyers, accountants, landlords, leasing companies and other related entities.

A business owner may ask: "Why can't I sell it myself?" There are several reasons why most owners choose not to:

  • An owner representing themself cannot maintain anonymity and the lost confidentiality could seriously hurt the business
  • An owner may not be knowledgeable in current areas of law, accounting, taxes, and marketing of businesses
  • An owner typically does not have the ability or time to contact, screen and qualify a large group of prospects to find a qualified buyer who is serious and will offer a fair price
  • A third party can become very useful, especially at the peak of negotiations, when a deal can fall over without experienced negotiators in charge. A skilled broker will often see the sale process continue
  • An owner's talents are much more effectively utilised in running the business than in trying to sell it
  • An owner generally would not have the experience, knowledge, and negotiating skills needed to sell his or her business efficiently and for the best price, particularly in a highly emotional negotiation such as the sale of a business where the buyer's objectives are totally opposed to those of the owner.

Liddiard Real Estate Services has trained and professional staff. They are knowledgeable and skilled in business sales and they can make the sale of your business a reasonably stress-free experience. Call us to find out how we can help.

Preparation of Business for Sale

Before Liddiard Real Estate lists a business, there is information that needs to be obtained. You can help by doing the following

  • Contact your Accountant for tax returns for the last five years if possible
  • Draw up a list of Plant and Equipment, with approximate or book values if available
  • Obtain a copy of the current Lease - have a copy or contact your Accountant or Solicitor
  • Keep a record of Weekly turnover for the last 52 weeks
  • Obtain a copy of your current Business Name Registration certificate
  • Obtain a Copy of any Licences, Permits etc
  • Obtain accounts for the last three months and any invoices for purchases
  • Obtain any documentation relating to Local Government Zoning, including Health Inspections and any Development Applications
  • Obtain employment rosters and a list of staff detailing period of employment, skills, duties, wages and information on any contracts with staff.

We advise that your business premises should remain tidy at all times and your staff always be polite and friendly.

The best idea is to call Liddiard Real Estate Services 6 to 12 months before you want to sell your business. We can ensure that when your business goes on the market it is ready, and will get top price.