The four people you need when selling your business
Selling a business is more complicated than selling your home. Where it takes time and effort to pack your pots and move your furniture when moving home, there are many more detailed concerns you have when selling a business, such as how to value it (how do you value its potential growth vs valuing your business assets?), how long to expect it to be on the market, what will happen to your staff when you sell and a host of other factors impacting your decision to sell. For this reason, it is quite common for business owners to put off the sale of their business until it has ceased to be as productive as it once was. This leaves them with a lower return on the sale compared to what they could have received if they had valued the business at its peak and sold when its profits were continuing to climb.
To make things as easy as possible when selling your business, there are four people you need to have by your side well before you decide to sell.
You probably won’t have gone far with your business without an accountant. Developing a good relationship with your accountant is key to getting the best out of your business as they can help you get the most out of your money and avoid any pitfalls as a business owner.
Come the sale of your business, an accountant should not dominate the process. However, they are typically most useful during what is called the ‘due diligence’ stage of the sale.
During this process, an accountant is a valuable resource when collating your financial records (balance sheets, annual reports, audit reports, income statements), your business contracts (e.g. with wholesalers) and employment matters (wages, leave outstanding etc.).
Having this information ready prior to the sale of your business will assure prospective buyers that you have remained on top of your finances and ease their efforts to carry out their own due diligence.
A commercial conveyancer can give you significant insight into some of the areas of selling a business that you may not initially consider. For instance, your responsibility as far as insurance is concerned, possible exemptions to paying GST in the transfer of the business, alerting you to the proper timing and channels you need to follow when selling (for instance, informing your bank of your request to release your mortgage) and helping you evaluate any contract that your agent/business broker formulates for the sale.
Where a conveyancer may be different to a solicitor is in their experience in ensuring you get the best out of the sale of your business, using their knowledge of the typical processes and timing of a sale and where your business could possibly make the most of tax exemptions etc.
A solicitor offers you an irreplaceable legal oversight during the sale of your business, especially when it comes to the terms of your contract are concerned, as well as your responsibilities as a seller.
As much as due diligence may protect you, a solicitor will look at the potential buyer and make sure that there cannot be a circumstance where you are left with a contract not being adhered to by a buyer and the costs associated with listing the business still on your shoulders.
A solicitor will be able to highlight all the possible legal complications/considerations you need to be aware of. For instance, do you intend to open a new business similar to that you are selling that is within a close geographical location to your old business? A solicitor will be able to give you the legal protections (set out in your contract) to establish a new business or come to an agreement with the buyer.
A business broker is key to securing the best price for your business. Business brokers, as distinct to solicitors, accountants or conveyancers, have strong connections/networks within the business community and may be able to speed up the sale of your business by finding a potential buyer long before you even think about listing it.
A business broker will also help lead the marketing of your sale, aid in the negotiation of terms and the production of a contract of sale. An accredited business broker brings to these aspects of the sale a high level of experience, helping to smooth the entire process.