Prepare, Prepare, and Prepare
Preparation is vital when selling a business, and there are many little things to consider as being a necessary part of preparation. The time to start preparing your business for sale is the day that you start the business.
Some things to prepare are:
1. Provision of full financial accounts for three years + balance sheets
2. Prepare exit strategy or succession plan
3. Calculation of nett realisation after sale & Cgt preparation
4. Business valuation or appraisal to set realistic price
5. Simplified management structure and processes
6. Standard operating Policy & Procedure manuals
7. Register Copyright or trademarks if necessary
8. Improved presentation of business premises and personnel
9. Legal advice and preparation from solicitor or lawyer
10. Tax planning & financial planning advice
11. Elimination of reliance upon “Key People”
12. Debtor management
13. Rationalise stock to the lowest manageable level
14. Estimation of Work-in-Progress & future orders
15. Diminish reliance upon either key products or key clients
16. Establish secure future trading conditions & tenure
17. Ensure all equipment, signage, and plant are in good condition
18. Ensure future advertising and marketing are in place
19. Consider changing trading name
20. Consider appointment of reputable agent or broker
21. Plan a marketing and advertising campaign
Essentially, the thought and preparation involved at the outset can make a huge difference to the nett amount realised by the seller at the completion of the transaction. Don’t walk away from the sale of your business regretting that you could have done more, and created a better result. Maximise your nett return by taking time and properly preparing in advance. Often we have seen companies and individuals sell their businesses and then – when the transaction is completed – the owners and management have realized that they didn’t allow for Capital gains tax, or other expenses such as loan payout costs, or release of bank security. In some cases this has cost many thousands of dollars, all because planning wasn’t conducted at the outset. You really need to think ahead, and the services of an experienced business broker are invaluable in creating a “checklist” of issues to be addressed to make a sale a planned event – rather than a regrettable disaster. Don’t cut corners – engage a professional, and take the time to start planning from the very outset, even if you aren’t thinking of selling today, now is the time to start planning.
