How long is the legal process?
From the signing of the heads of agreement until the completion of the sale will usually take six weeks. This time can vary, however, depending on the nature of the business or whether there are any legal complications. Make sure that you leave adequate time for the legal process to take place.
Can you sell a business that is losing money/how to sell a failing business?
If you have seen a downturn in your business, a good option may be to sell. There are a few reasons why a buyer would be interested in a failing business.
For example, a buyer might be looking for an investment that will have a lower valuation that they can buy, inject capital or energy into it and turn it around so that it begins to make a profit.
You will have to be sure that you have considered all outstanding legal issues, though and you will need to clear as many outstanding debts as possible. Focus on your assets and market these to buyers such as your customer base or your supplier relationships.
You will also need to be honest with potential buyers about your flaws. These will be revealed during due diligence and it is better to be upfront about these from the beginning. Any buyer looking at purchasing a failing business will still want to conduct a thorough due diligence.
The history of a business will often be an indicator to potential buyers of future profitability. A buyer may want to invest in a business that has already been market tested.
Do I need a lawyer to sell my business?
Due to the complicated nature of selling a business, it is wise to have a lawyer involved in the process. It is not a prerequisite, however, there are a lot of contracts that will need to be written up and worked out that will make it advisable to have a lawyer to help.
Some of the ways that a lawyer will help you are by making sure that all your contracts with customers, suppliers and employees are up to date. They will be able to write up a Non-Disclosure Agreement for the potential buyer to sign before the due diligence process and negotiate and draft the sales agreement.
If you have several parties working on the sale of your business, make sure that you are clear on your expectations and the tasks that each party is responsible for.
Do I pay tax if I sell my business?
When you sell a small business, you may have to pay Capital Gains Tax (CGT). This is a tax that you have to pay when you sell an asset. You may, however, meet some criteria that will allow for concessions that will reduce the amount of tax that you will be required to pay. The CGT threshold is $2 million.
There are concessions for retirement and for assets that have been owned for more than 15 years. If you are uncertain of the tax that you will need to pay, you should consult an accountant that will be able to assist you with the calculations.
Do you need a broker to sell a business?
There are many factors that will come into play when deciding whether or not to use a business broker. A broker can help you through the process so that you can keep your focus on running your business. They will also have experience that you lack when it comes to finding a buyer, due diligence and the negotiations.
You will, however, be required to pay the broker a commission of the sale. The broker that you choose will also make a difference. Make sure that you find the right one for you.
Read more in depth on the question here.
How can I sell my small business fast?
Make sure that you have priced your business correctly. If your business is overpriced, you will struggle to find a buyer. Make sure that you are prepared for the due diligence process. Have all your documents and financials in order and ready when requested.
Make your business listing as attractive as possible. Get some really good, high quality images of your business to go with the listing and give as much information as possible to any potential buyer.
You could also find a similar business to yours that might want to expand their customer base or offerings through purchasing your business. Usually, they will not want to buy the premises or the fittings or the equipment. They will, however, be looking for your contracts with suppliers and your intellectual property.
How do I market my business for sale?
In order to market your business, you should take advantage of the reach that putting online will have. You can also use a broker to help with this process and they should be able to take this action for you or assist you. They will also be able to advertise your business through their established networks.
No matter whether you advertise online or offline, you will need to get high resolution images that give a clear idea to the buyer of what your business looks like. You will also need to include as much information as possible in the advert. The more information you can include without giving away sensitive information, the better.
Luckily, BusinessesForSale.com can help you with this! Get hold of us if you want us to write your listing for you to make sure that it is written for SEO and to ensure you get noticed by buyers.
How do I sell my business privately?
If you want to sell your business privately, you can reach out to customers and people in your network to see if there is anyone that is interested. You can also find out if there is a competitor that could benefit from buying your business.
Be careful, however, not to share sensitive information without having an NDA in place!
Alternatively, you can list your business on an online marketplace. This will give thousands of potential buyers’ access to it and anyone searching for a business for sale online will, hopefully, come across your listing.
How do you value goodwill for a small business?
Goodwill makes up a significant portion of the value of a business but, due to its intangible nature, it can be difficult to assess its value.
The value of your goodwill be higher if you have a good standing in the community, you have solid relationships with your customers and suppliers, or you have protected intellectual property that gives you an advantage in the market.
There are several methods used to calculate goodwill, however, most importantly, the value will be what someone is willing to pay for your business. Find a professional to help with the valuation if you are unsure.
How long does a business take to sell?
Generally, it will take six to nine months to sell a business. This will, however, vary depending on the business and the sector that it is in. If there is a downturn in the market, it can take longer. Valuing your business correctly is the best way to make sure that your business sells in a timely manner.
How to know when to sell your business
We have created a guide to help you through the process of selling a business. If you are struggling with the decision of when to sell, read the section on timing the sale of your business.
How to sell an existing business
Our guide to selling a business will take you through this process step by step. If you still have questions, you can employ the services of a broker to help you.
This guide will give you a good idea of what it is that you need to consider when it comes to selling your business. Go through it carefully to make sure you have not forgotten any of the important steps.
Alternatively, why not contact our customer services team to get some advice!
Should my accountant sell the business for me?
There are a lot of parts of the sale that an accountant can assist with. They can help you calculate the value of your business and go through your financials and prepare them for the due diligence process. The better valued your business and the clearer your financials, the more likely you are to attract a buyer.
An accountant with experience in selling a business will also be able to work out the deal structure. However, their experience is important. If they have never worked on the sale of a business their assistance will be less helpful.
Finding a buyer may be better done through an agent or broker and, when valuing a business, you will need to find someone who is very familiar with the process. The more experienced your team, the better the results you will get.
What happens to cash when selling a business?
Once you have sold the business, you, as the seller, will keep the accounts receivable and the cash on hand. The assets like the equipment, the merchandise and the brand will be put under control of the buyer.
However, each transaction is different and so in some instance’s buyers may take over the accounts receivable so that they can have cash flowing into the business and begin trading immediately.
What is a disclosure letter?
A disclosure letter is an important part of the sale of any business. It is a document where the seller will make any disclosures against any warranties that the buyer will need the seller to give.
This document will usually be prepared by the seller's legal team for the buyer. Usually, the seller will need to put as much detail and information into the letter as possible. The seller must make sure that the buyer is able to gain a full understanding of each of the matters disclosed.
If, as a seller, you are unsure as to whether something should be included or not, err on the side of caution and put it in.
What is an NDA?
A Non-Disclosure Agreement (NDA) is a document that will protect the seller during the due-diligence process. Any potential buyer will be accessing information about your business, its finances and other sensitive information. It is vital that you have an NDA in place in order to protect your business.
Ask for professional advice when drafting an NDA to make sure that you have included everything in it. This can include employee information, details of your products, your technology or innovation, financial information and databases.
How to sell your small business without a broker
Listing your business online can be a good way of reaching potential buyers all over Australia without using a broker. This will mean that you will have an active role in the sale. If you have experience in selling a business, this would be the perfect option for you.
While you may still need to consult a lawyer or an accountant during the sale, you will avoid paying the broker commission.
Nobody will be as passionate about your business as you are. This puts you in a unique position to sell it. If your business is small, the right option for you might be going it alone.
How to sell your small business with a broker
Keeping your business running at full speed right up until the moment you hand over to the new buyer may mean that you don’t have the time to sell your business yourself. You might also be unfamiliar with the process and so need the help of a professional.
A broker will be able to handle much of the sale for you including drafting the terms of service and the negotiations. Make sure that you find the right broker for you and one that you can trust with a good track record.
A broker will take you through the process and the negotiations as well helping you with the valuation of your business.
How do I choose a business broker to sell my business?
When choosing the right broker, you need to carefully consider your needs. Find a broker that has experience with businesses in your sector and of a similar size. If you can, speak to previous clients and find out about their experience with that broker. Choose a broker that has experience and connections in the geographical location that your business is located.
Most importantly, you need to get on with the broker. You will need to be able to trust that the broker has your best interests at heart. There are hundreds of brokers all over Australia. Take your time finding the right one in your area so that the sale of your business goes well.