Options to consider when selling your business

Q I am a business owner aged 60 years, and considering selling my business. Can you give me some advice on how to proceed with a business sale?

A SELLING your business is one of the most important financial decisions you will ever make. For many entrepreneurs, it will be uncharted territory – it might well be the first and only time you sell a business.

Planning a strategy to maximise the assets of your business on sale requires patient, advance planning. You should start considering the issues two to five years in advance of your plan to sell. Don’t forget to consult solicitors, accountants, financial advisers and brokers before selling your business.

Disposal options: Business owners are faced with the problem of how to extract themselves from their business when the time comes for them to retire or move on to another venture.

Other than passing your business interests on to members of your family, the principal options for disposing of assets are:

- Selling your share in the business to your co-owners or partners

- Selling the business to a third party

- Public flotation or sale to a public company

- Selling the business to the management or entire workforce - Winding up the business

Reasons for the Sale: Owners commonly sell their businesses for any of the following reasons: retirement; part of the business plan; partnership disputes; illness and death. Some owners consider selling the business when it is not profitable, but this can make it harder to attract buyers. Consider the business’s ability to sell, its readiness and your timing.

There are many attributes that can make your business appear more attractive, including: Profits in the business; consistent income figures; a strong customer base; a major contract that spans several years

Timing of the Sale: Prepare for the sale as early as possible, preferably a year or two ahead of time. The preparation will help you to improve your financial records, business structure and customer base to make the business more profitable/attractive.

Business Valuation: Determine the worth of your business to make sure you don’t price it too high or too low. Locate a business appraiser to get a valuation. The appraiser will draw up a detailed explanation of the business’s worth, this document will bring credibility to the asking price.

Finding a Buyer: A business sale may take between six months and two years to sell. Finding the right buyer can be a challenge.

- Get two to three potential buyers just in case the initial deal falters

- Have confidentiality documents signed before any buyer looks at your business prospectus

- Consider a Business Broker to find the right buyer for you and protect your business during the sale process. A Business broker will be able to help you achieve the best price, ensure confidentiality and complete the process in a timely manner. The broker will be able to prepare a valuation and prospectus, perform due diligence, identity the list of potential buyers mange and negotiate all concerns and the best terms for Sale of Business. The broker should have a commercial team in place to cover all areas of Sale including the tax implications of your situation.