Selling your business can be a challenging task and it’s important to get it done right. There are several important steps to be taken to ensure a smooth handover to the new owner.
Seek advice early
Rockliffs Lawyers can assist you in preparing a well drafted confidentiality deed prior to you negotiating with potential buyers and providing guidance during the negotiation period on issues including employment, leases, seeking tax advice and other key terms.
You should also seek advice from your accountant to assist in determining a price and preparing/making available the necessary documents to be available for disclosure to a potential buyer during their due diligence process & any tax implications of the sale.
You should also consider seeking advice from a business broker, industry specialist/consultant & financial planner.
Identify what you are selling
The sale of a business can be structured in different ways. For e.g you may want to sell your business as a going concern – i.e this involves you selling your business together with all of the things that are necessary for the purchaser to continue operating the business including plant and equipment, stock, a right to occupy premises, the employees and their accrued entitlements.
Alternatively you may wish, rather than selling off your entire interest in the business in one go, to slowly invite employees to purchase an equity stake in the business, which would involve selling shares in the company which owns the business rather than pieces of the business itself.
The sale of a business can involve as many or few of the following:
- Business/company name
- Plant and equipment
- Stock in trade
- Right to occupy premises
- Contracts (for eg with key customers)
Find buyers for your business
The sale of your business can be advertised by business brokers, who are often a good resource and possess sound knowledge of the local market and can assist with pricing and marketing strategies. Alternatively you could consider advertising online, through your existing networks, in trade publications or using your industry contacts, word of mouth or notifying customers of your sale (as long as you are confident it won’t harm your business with the customers knowing you are looking to sell.
Negotiate the Sale
It is important to ensure that the information you provide to buyers about your business is accurate and true, otherwise if it is later found to be untrue, it may be considered misleading and deceptive conduct.
You will need to agree with the buyer on a range of points including:
- Sale price
- Deposit (usually 10% of the sale price)
- Settlement period
- Handover training for the buyer (if any and either before and/or after and the terms thereof)
- Arrangements for existing staff
Prepare the Contract
A Contract for Sale of the Business will then need to be prepared setting out all of the terms and conditions agreed upon between the parties and also attaching relevant disclosure documents.
Once the Contract has been approved by both parties, Contracts are exchanged and the buyer pays a deposit. On completion of the Contract, the business is transferred to the buyer, the balance of the agreed sale price is paid by the buyer to you (along with any necessary adjustments required under the Contract) and any other conditions set out in the Contract are fulfilled.
For more information, contact Rockliffs Lawyers on (02) 9299 4912.