Selling a business will always be a complex and multi-faceted process, but there are ways to make it easier. Even if selling is not on your horizon, there are still advantages of making your business sale-ready now. Being sale-ready is about being prepared if an emergency forces you to sell. It also gives you greater flexibility to respond to an unexpected opportunity to sell. Finally, a sale-ready business is simply stronger than one that isn’t.
If your business employs at least four people we strongly advise you to seek advice to prepare your business for sale. Our experienced team offers the wisdom that only comes from many years of experience assisting business owners. In addition to our technical abilities, we also bring significant ‘soft’ skills including an acute awareness of conditions within the major industry groups as well as valuable benchmarking knowledge.
Business Preparation
1. Audit advantage
You can facilitate a smooth sales process by having your business professionally audited to the Australian Auditing Standards. A buyer’s accountant will always do their due diligence, but it will be advantageous for you to be able to present fully audited business accounts. The auditing process itself also provides valuable information about the health of your business. This can help you to keep the business in good shape throughout the sale period.
2. Structure for tax efficiency
Certain business structures may facilitate a tax-efficient business sale, including ownership through a trust or company. The small business CGT concessions can apply and it is important to have the right structure from the beginning. In some cases, it may be highly advantageous to utilise super concessions and other retirement concessions.
3. Organised HR
Your business will be more attractive to a buyer if your offer includes a happy and ongoing arrangement with key people who have defined roles. This means the business will remain operational and profitable during the sales transaction. Numerous buyers look for a business that can stand on its own without relying on the buyer being there after the handover period.
4. Timing & expectations
No-one’s ever said, “I sold my business too early”, but many a business owner has had to settle for a mediocre deal by waiting too long. By holding out for the maximum sale amount, you may miss an opportunity that won’t come again, and/or the value of your business may erode while you are waiting. As your accountant, we can help you maintain reasonable expectations of sale price and time frame, with the flexibility to close a deal that is appropriately structured. While you are waiting to sell, it’s important to keep your eye on the ball; make sure you are still running the business and are not so focused on selling that the business suffers as a result.
5. Other professionals
In addition to your accountant, there are many experienced professionals who can help with the sale of your business including business brokers and lawyers. You should aim for a marketing plan that ‘opens up’ the sales process so that you are negotiating with multiple buyers. You will need legal advice to ensure that the legal processes are tight, including that you have made the required disclosure in presenting your business for sale.
Personal Preparation
The sale of your business will have significant implications for your personal financial situation and you must consider this carefully, allowing due time to meet with your financial advisor, so you are able to consider and implement their recommendations.
You should have a wealth management plan in place so that the proceeds of your sale are managed appropriately. This is of particular importance if you are retiring as it will enable you to make the most of the rewards from the sale of your business so you are able to enjoy your life after work. Your goal will be to fund the retirement lifestyle of your choice without financial stress. It will also be important to look beyond the business to your loved ones and the legacy you wish to leave.
Rosenfeld Kant and Rosenfeld Kant Wealth Advisors offer accounting and financial planning advice that fully integrate your business and personal financial needs. If you have any questions about when, whether or how to prepare your business for sale, please contact me Gary Williams or your accountant at Rosenfeld Kant (gary@roskant.com.au, raul@roskant.com.au, elias@roskant.com.au), and Tony Bates (tony@roskant.com.au) at Rosenfeld Kant Wealth Advisors. Phone (02) 9375 1200.
The information (including taxation) contained within this article is of a general nature only and neither represents nor is intended to be personal advice on any particular matter. Rosenfeld Kant and Rosenfeld Kant Wealth Advisors strongly suggest that no person should act specifically on the basis of the information in this document, but should obtain appropriate professional advice based on their own personal circumstances.
