We’ve heard a lot about ‘The Great Resignation’ in the media recently – a pandemic-inspired, collective “rethink” of careers and the role of work in our lives. It has already led many to quit their jobs, change their career or sell their business in a bid to “downsize” their career to focus more on other aspects of life.
If you are a business owner considering such a change, read on for some useful tips and things to consider.
We read a lot about selling big assets like houses and cars; the scams, the tricks, and the how-to guides. But for the growing number of Australians choosing to go in alone in their professional life, selling their business can be the most complex and personal transaction they’ll ever encounter.
While houses and cars need to be carefully presented, they have a relatively objective value that’s determined by a definable market. That’s simply not the case with a business. A multitude of immaterial concerns – goodwill, employee entitlements, ongoing contracts and relationships – can have a bigger influence on the asking price than solid assets such as inventory and equipment.
It pays to be organised and know exactly where your business stands prior to starting negotiations with an interested buyer.
The first steps include:
- Making sure all service and customer contracts are in writing.
- Determining the currency of all licenses, permits and insurance policies.
- Calculating outstanding employee entitlements.
- If the business operates by virtue of a lease over property or equipment; making arrangements for these to continue under a new owner.
It is prudent to set strict parameters around the negotiation process.
Before committing, buyers will want to inspect confidential financial records to independently ascertain the business’ performance. Before being allowed to do so, they should be asked to agree to a non-disclosure clause to ensure this sensitive information is not disseminated to rivals or the general market.
Another important consideration is a ‘key’ employee – the star barista in a café, or a highly renowned chef at a restaurant. Often purchases will be contingent on the continuing employment of a staffer who has made themselves virtually indispensable. If so, they need to be closely consulted during the negotiation.
Finally, expert advice is crucial. The sale contract will continue to evolve and take shape as negotiations progress. A team of experts in your corner will help to streamline this process and ensure your best interests are constantly documented and updated.
Small to medium business ownership is rewarding, but tough. The hours are routinely long, and the set-up phase can seem never-ending as owners push to break through the profit ceiling.
Often, the sale of a business you’ve worked tirelessly to build is the ultimate payback for years of effort. Don’t risk selling yourself short by not having the right advice.
Tonkin Drysdale Partners has decades of experience helping and protecting business owners; not only to get the right financial outcome but also to sell their business with the same dignity and pride in which it began.
Contact us to find out more about how we can assist.