Here is part 6 of our 10 do's and don'ts of business selling. We gained these insights from hard-won experience and observing what can happen in the business selling market!
Here is part 5 of our 10 do's and don'ts of business selling. We gained these insights from hard-won experience and observing what can happen in the business selling market!
5. DON’T – Consider the sale of your business simply as a chance to pay off your loans and debts
Do – Sell for the right reasons
Think carefully as a business owner prior to taking your business to market with an advisor or broker, or selling it yourself, as to the reasons and objectives you have for selling.
This helps you create a negotiation framework to determine what an acceptable offer might be.
Here is part 4 of our 10 do's and don'ts of business selling. We gained these insights from hard-won experience and observing what can happen in the business selling market!
4. DON’T – Fail to disclose critical information material to the business performance
Do – Be forthcoming with potential purchasers
In tip Number 1 we talked about credible and robust information and establishing a purchaser’s confidence.
Here is part 3 of our 10 do's and don'ts of business selling. We gained these insights from hard-won experience and observing what can happen in the business selling market!
3. DON’T – Go into a sale process without getting advice on the taxation and other corporate and entity impacts of selling
Do – Understand the tax implications
Occasionally I find myself working with a business owner on a sale process and we are reviewing offers for the business from interested parties based on an asking price and an information memorandum that has been distributed on the business.
We recently sold an industrial services business. It was an owner-operated family business, less than 10 years old, with roughly $5 million annual turnover. It had been built with a very specific focus on particular markets and had very strong customer relationships.
One of the parties interested in this business was a larger conglomerate industrial services business with outside investors and equity.
It was looking to build a portfolio of like businesses across various service propositions in the industrial and environmental sector, with a view to potentially listing the business down the track.
This is the second post in our Top 10 do's and don'ts of business selling blog series.
2. Don't – Head into the sale process without first seeking advice on what your business is REALLY worth
Do – Get a professional valuation
We all know that beauty is in the eye of the beholder. The first business I sold was two retail businesses that had been on the market for eight years.
Business owners often seek a business valuation after being prompted to do so by a 'significant event’, for example a family break-up, retirement, need for business restructuring, bank lending requirement, purchase offer, bringing in a new shareholder or partner to the business and so on.
In this video I explain how valuation can actually be used as an ongoing management tool, adding value while you’re running the business and also potentially boosting value on exit.
At JPAbusiness we have been advising our clients on their succession plans, business value and exit strategies for many years now.
As we always tell our clients, selling your business is not an exact science; it’s about planning, professional marketing, timing and finding the right match regarding value and terms.
So, as we have seen and experienced a few ‘war stories’, we decided to turn these learnings into Do’s and Don’ts for business owners looking to sell a business – just a few tips from hard-won experience and observing what can happen in the business selling market!
This week we explore number 1 on that list:
There are many legal issues to consider in a business transaction process and, as we have often said in our eBooks and blogs, engaging a solicitor with experience in business sales is critical.
Business owners face unique challenges when they have multiple children and those children have their own expectations as to how the family business should transfer to the next generation.Engaging a business advisor early on can assist to ensure each party feels that the way a business is transferred to the next generation is fair and reasonable for all.
This process is best started well before parents are looking to retire or children are heavily involved in the business.