As the title says, selling a business on your terms has its rewards and subtle benefits. Many times, I have been out and about speaking with business owners regarding possibly selling their business, or having discussions surrounding their “exit strategy”, and asking if they actually have one in place.
I’m always surprised at how quickly the business owner responds along lines of… “why would we want to sell, were making good money” or… “we may look at doing something in 5 years” or… “we haven’t really thought about selling yet or even an exit strategy”.
As a broker, I meet regularly with accountants and the main topics of conversation are usually around …
-PLANNING FOR GROWTH
There are far too many business owners operating businesses with not even one of the points mentioned above in action, (or written down) that they could speak confidently about – not one!
How can this be?
What’s the solution?
One of the best things a business owner could do “to sell a business on their terms”, is this; engage with a professional business broker (one they trust & feel comfortable with) so a due diligence on the broker is recommended, as they are not all the same, and then do “A Health Check” on the business.
The health check covers many crucial aspects of the business, things that business buyers usually “drill down” on. So there should be no shortage of preparing and planning when the decision is made to either sell or exit the business at a desired time frame. A good broker will discuss the specific aspects mentioned below because they know that once these are all in order – the Seller is in a stronger position.
The Health – Check List
– Up-to-Date Financial Data – historic and future projections, BAS Statements, Tax Returns
– Current Lease Agreement – Tenure, Options, Bank Guarantee,
– Stock Level – Current and Old Slow-Moving Stock
– Staff – Super, Holiday Pay, Long Service Leave, Employment Agreements
– Creditors & Debtors
– Plant & Equipment – Unencumbered, Encumbered
– Suppliers – Written Agreements
– Fringe Benefit & Capital Gains Tax (Accountant’s field)
Once the business is placed on the market to sell, and knowing that everything mentioned above is sorted and is in good shape (Health Check), then you can sell your business on your terms.
The business owner can go about their day-to-day running of the business knowing everything is in order and that they have a good solid business ready to be presented to the market – without any grey areas.
At the end of the day having everything in order is potentially going to save a business owner thousands of dollars, when the negotiations start because they are ready. Also, – and this is crucial, you will be in a better position to offer your business to the market that any other similar business. Don’t forget that there are many, many other business owners who will be looking to sell in the future. You need to give yourself the ability to compete with those other business owners, and get a superior result that they can’t get – all by being ready, and that starts with the “Health Check”.
Ian Salter – https://www.linkedin.com/in/iansalter/
Senior Broker – Benchmark Business Sales & Valuations
View Ian’s profile by clicking here.