SELLING YOUR BUSINESS: Keys to maximising your price & getting deals done
1 November 2019 by Simone Pentis
Whether you are about to sell your business now or considering it for the future, there are a number of preparatory steps you can take to help maximise the asking price, as well as decrease the costs and delays that can be involved with the sales process.
One of the biggest hurdles in any sale can be the successful getting through of the due diligence investigations undertaken by the buyer, their financier and these parties’ advisors to back up the business’s value and asking price. While the type and size of your business may determine the extent of any due diligence likely to be undertaken, in any event a buyer will want to ensure that they are getting value for what they are buying.
If due diligence inquiries do not go well then a buyer may not proceed, seek continual extensions, further information or renegotiate the price to take into account any perceived risks. Additionally, if finance from a bank or another party is being sought, they may also require satisfaction with the due diligence investigations before they will lend any finance.
Therefore, a badly prepared and managed due diligence investigation can not only cause unnecessary delays and legal and accounting costs, it risks loosing any sale or reducing the purchase price.
To help avoid the above potential problems, before undertaking any sale some of the items you consider are to:
Make sure you have kept and maintained clear accounting and tax records that are readily available;
Regularly consider what are the key and material arrangements for the business’s continued operation and/or success, then ensure these arrangements are appropriately set out in writing and/or registered to give you the best protection and value. If unsure, then you should be working with your lawyer in advance to get you into your best position when ready to sell;
Double check your business contracts that may require you to pay them out in the event of a sale, and/or cannot be transferred or are subject to certain conditions before they can be transferred;
Be aware of any security interests someone (for example a financier, landlord and/or supplier) may have and you will likely need removed before any settlement; and
Do an internal intellectual property audit to work out what you have and that you do legally own and can transfer.
Another consideration before selling your business is to work out a strategy of how you will promote the business, what information you will hand over and the step you will undertake to protect yourself and maintain value.
For our Franchisee Seller Tips & Checklist please contact us.
We work with our clients to put them in the best position. To let us help you get into the best position and then carry it effectively through, please contact us at admin@advpartners.com.au or on 0406 992 365 for an initial free chat and access to our Franchisee Seller Tips & Checklist.
Please note that this is a general brief update, it does not purport to be comprehensive legal advice relevant to your circumstances. Consequently, specific legal advice for each of your circumstances should be obtained first before taking or not taking any action in respect to this area.