Selling a business is a major decision that requires careful planning to ensure you achieve the best possible outcome. From determining whether selling is the right option to finalising the sale, each step plays a crucial role in securing a smooth transition.

Is Selling the Right Choice?

Before making the decision to sell, consider:

  • Whether you truly want to sell or simply need a break.
  • Alternative options like bringing in external management.
  • Market conditions and the potential return from the sale.
  • The impact on your financial future and any restrictions on future business activities.
  • Seeking advice from financial and legal professionals to understand the full implications.

Preparing Your Business for Sale

Proper preparation can increase your business’s appeal and value. Key steps include:

  • Advice from a Business Broker expert in your industry 
  • Documenting business processes and employee roles for an easy transition.
  • Reviewing supplier contracts and lease agreements to avoid disruptions.
  • Ensuring financial statements for at least the past three years are up to date.
  • Encouraging employees to take leave to reduce liabilities.
  • Presenting premises in the best possible condition.

A buyer’s information pack,  provided by  a professional business broker, should include:

  • A confidentiality agreement.
  • Business description and customer profile.
  • Industry benchmarks and business performance data.
  • Detailed asset list, intellectual property, and financial statements.

Setting the Right Price

Determining your business’s value can be challenging. Common valuation methods include:

  1. Return on Investment (ROI):
    • Sale price = (net annual profit + add backs before tax x 100) ÷ ROI percentage.  Multiple net profit method.
  2. Asset Value: (when businesses have recently opened or very low net profit or loss on P & L 
    • Sale price = total business assets + minimal  goodwill.

Consult a financial adviser, accountant, or licensed business broker for an accurate appraisal. 

Making the Sale

Marketing your business effectively is key. Use dedicated business sale websites and keep details confidential. Ensure all potential buyers sign a confidentiality agreement before receiving  information.

Negotiating and Finalising the Sale

After conducting due diligence, buyers may negotiate terms. Be prepared by determining:

  • Your ideal sale conditions.
  • Areas where you are willing to compromise.
  • A clear point at which you would walk away.

Involving a professional business broker and settlement agent helps ensure a legally sound and hassle-free transaction. The final contract should include all negotiated terms and conditions.

By planning ahead and following these steps, you can navigate the sale process effectively and maximise the value of your business.

Are you buying a business in Perth? Do you have a Perth business for sale? For more information on how you can get the best results, contact Angela at Advance Business Brokers today.

MAR25 (CC /FF SELLERS)