Selling a business | 5 min read
It pays to be prepared when selling your business. Buyers like sellers that are on to it, so being organised can speed up the sales process.
Here’s a business selling checklist with everything you need to help get you ready.
First steps to selling your business
- Ensure you’re ready – selling a business isn’t all about the money, so do some soul searching and think through why you really want to move on. Make sure selling is the best move for you and your business.
- Decide how to sell – choose whether to sell your business yourself or use a business broker. It’s never been simpler to sell a business on your own and you’ll avoid paying any commissions. A business broker can act as your representative and manage much of the process for you, for a fee. The best choice for you will depend on resources and your finance situation.
- Pull in the professionals – get the help of the right business professionals and get a lawyer and an accountant on board from the start. They will help you from the preparation stage, right through to finalising the sale.
- Check franchise agreement – if you’re on-selling a franchise, check your agreement for any sale terms. You’ll need to follow anything written in the contract and keep your head office informed.
In-depth preparation when selling your business
- Compile financial records – profit and loss statements, bank loans, forecast financials, and an outgoing costs breakdown all need to be up to date, and gathered together.
- Go through commercial information – ensure any supplier accounts, registration papers (for your ABN and other permits), asset and insurance details are in order.
- Gather operational documents – update and compile your business history, supplier information, stock inventory lists, strategy details, procedure and process documents, rosters, and marketing materials.
- Pull together legal details – prepare any staff and customer contracts, leases, and health and safety guidelines. If you’re selling a franchise, ensure you have your franchise agreement and other useful information on hand.
- Round up forecasting documents – record anything that shows intellectual property, revenue growth, or favourable market conditions to help buyers see your business as a good investment.
- Tidy the premises – don’t bother with a total renovation but think about whether your business looks like a solid investment to potential buyers. Does the place need a professional clean? Could you replace some décor, upgrade old appliances, give it a paint job or new carpet? Remember, first impressions count.
- Decide on a value – there are many ways to value a business, but you’ll need the financial, commercial, operational, legal and forecasting documents mentioned above regardless of the method you choose.
- Prepare an NDA – interested buyers will want to conduct due diligence on your business, having a non-disclosure agreement ready to go for them to sign can help speed up this process.
- Take photos – whether you get a pro, or snap on your mobile phone, having clear, quality photos of your business is a must. You’re selling a business, so take pictures of where the value is, whether it’s the premises, marketing materials, your stock, or your great location. Consider what a potential new owner is buying into and capture it.
- Get the word out – talking to your network is a great start, but advertising your business for sale online is generally the best way to find potential buyers.
- Verify interested buyers – gauge how serious a buyer is about purchasing your business. Research whether they have the finances and credentials needed, as well as any potential plans for the business.
Final steps when selling your business
- Set non-binding heads of agreement – talk to your lawyer about creating a draft sale of agreement. It provides security for you as the seller and allows a potential buyer to conduct their due diligence and start committing to the sale, without a legally binding commitment to buy.
- Check permits, licences and contracts – see what can and can’t be transferred to a new owner. Start by talking to your landlord about any leases and then look at things like business licences, permits and contracts with equipment suppliers.
- Negotiate the sale – when you’ve found the right buyer, you’ll need to negotiate the terms of the sale. This will include things like the sale price, settlement details and other additional clauses. Be prepared to compromise to get the best outcome.
- Seek franchisor consent – if you’re on-selling a franchise the new owner will most likely need to meet the same criteria from the head office that you did before you bought your franchise.
- Contract of Sale – when both you and the buyer agree, get a contract drawn up. Your lawyer and the buyer’s lawyer will need to check it.
- Take care of your employees – keep your employees in the loop and give them notice of what’s happening. Provide the correct paperwork whether you’re transferring their contracts to the new owner or ending their employment when the business is sold.
- Finalise the sale – sign on the dotted line. The buyer will pay the purchase price and you’ll need to transfer the business to the new owner. Here’s a full list of what you need to do once your business is sold.
- Handover to the new owner – tie up loose ends like leases and licences and finalise your tax returns. Fulfil any terms you agreed to in the contract, like training.
- Take a moment to reflect – congrats, you sold your business! Now, take a moment to reflect and say goodbye. It’s time to get started on your next challenge.
If you’re putting off advertising your business for sale because you don’t feel ready, remember that getting started is often...