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Posted: 4 Jan 2010
A great percentage of business buyers are first-time business owners and for most it is a major investment decision. Only a small percentage purchase more than one agency or rent roll in a lifetime.
Business owners need to be aware that most prospective buyers are risk-averse and should prepare and present their company for sale in a manner that given the maximum comfort and security to the buyer.
Below are some tips we have shared with business owners seeking to maximise the price they receive when they exit their company.
- price the business right – businesses and rent rolls do not have a precise value and the price achieved will depend upon a number of factors. Consult with our brokers for advice in this area.
- provide up-to-date financial information- the buyer (and his accountant) will want a current profit & loss statement and balance sheet.
- have a good reason for selling - the cautious buyer will want to know why you are selling such an asset.
- offer assistance and security - offering on-going support post-sale plus an extensive non-compete (or restraint of trade) clause comforts the buyer.
- have a complete list of assets – prepare an extensive list of plant and equipment that will pass in the sale plus a clear list of leased equipment you want to assign.
- prepare operating manuals - document all systems and processes, contacts for suppliers and service providers, and answers to FAQs. One of the main reasons franchises appeal to certain careful buyers is their 'turn-key' operation.
- identify intangible assets - The buyer needs to be aware of these. They may include branding, software, websites, supply contracts, customer relationships, licences, and other valuable assets that do not appear on the balance sheet
- audit your files- an extensive audit of leases, authorities, conditions reports, bond lodgement forms to ensure that they are up to date will minimise delays or difficulties during the due diligence process.
Every business owner should have an exit strategy alongside their business plan and have their business and rent roll in saleable shape at all times in case the unexpected happens.
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