There are many professionals to help you in the process of selling a business:
Business brokers: they cover any type of business for sale in any industry including factory, retail businesses and restaurants for sale.
Franchise professionals: they are the experts in franchises for sale and buying one.
Business lawyers: they take care of legal agreements and contracts of sale.
Accountants: they clean up your books, conduct due diligence and handle business valuations.
Business advisors and consultants: they offer the best advice, connect you to the right network and can whip your business into shape to sell for a profit.
What is a business valuation?
Business valuation is a process to determine the true worth of your business, to sell or buy a business at a fair price. There are several business valuation methods such as asset value and capitalised future earnings method. Consult an accountant or a business broker to help value your business.
How to sell a business?
These are the basic steps to sell a business:
Step 1: Determine why and what you are selling
Are you selling all or part of the business? Will you be staying on to advise or will you quit the business entirely? Are you looking to set up a similar business or franchise that could become a competitor in the future?
Step 2: Get professionals on board
You will need, at the very least, an accountant and a lawyer. Your accountant will help prepare your books for the buyer. They will assist you to meet your reporting obligations and wind up your involvement in the company when the new owner takes over. Meanwhile, a lawyer will help you draft and negotiate the contract to protect your best interests.
Step 3: Prepare the business for sale
Do a business valuation to set a fair price. This will involve cleaning your books, gathering financial evidence for potential buyers and dealing with debts and overdue payments.
Ensure all your business processes are transparent, smooth, scalable and replicable to entice more potential buyers.
Prepare a transition plan for your customers when the business changes hands.
Prepare your employees so that they can decide whether to stay or leave.
Talk to your manufacturers, suppliers, lenders and any party that you deal with to help them with the transition.
Step 4: Find potential buyers
Advertise your business online.
Use business brokers who can find potential buyers and business opportunities.
Use the word-of-mouth method. Approach competitors, suppliers or even clients who may be interested to take over.
Step 5: Negotiate the contract
Once you've narrowed it down to one buyer, then it is time to negotiate the contract. Don't focus on the sale price solely. Consider the terms and conditions carefully, recognize what will get transferred and what won't, and make sure you are on the same page with the buyer's expectations.
Step 6: Transfer the business
This is the phase with a lot of paperwork to transfer the ownership, assets, liabilities and networks. It is also the time to start executing your transition plan for your employees, customers, suppliers, contractors and other third parties.
Step 7: Deal with tax obligations
While it is tempting to use your proceeds, remember you need to deal with the capital gains tax in Australia. There may be other expenses such as GST, remaining leases, personal debts, etc.
What issues can arise when selling a business?
Make sure that the documentation transfers all the relevant assets and liabilities. The assets will include any property, equipment, fixtures, fittings and intellectual properties that the business owns. The liabilities will include debts to creditors and any existing contracts. Be cautious when making statements about the business prior to the sale. If those statements are untrue, they may expose you to a lawsuit for misleading the buyer, deceptive conduct or misrepresentation.