We're often asked the best way to sell a business
There are two key components at play in the sale of a business; structuring the transaction and positioning the business to the market.
Both elements are important and can significantly impact your result.
Structuring the transaction covers things such as pricing the business, the terms and conditions attaching to the sale, key terms in the contract, and ensuring the transaction structure is as tax effective as possible. Much of the structuring is about ensuring the vendors secure the most efficient and effective outcome from the sale. It is about maximising vendor position.
Positioning the business for sale is all about ensuring that you achieve a sale and that maximises your price. It covers areas such as ensuring there are no hurdles within the business that will limit its saleability, identifying the competitive position of the business within its market segment, ensuring that operating performance is as good as it can be and that the business benchmarks well in its market. Positioning also includes identifying the best time to take the business to the market, how to take it to the market, and who the most likely buyers will be.
Positioning is about doing everything needed to maximise the probability of a sale occurring, whereas structuring is about getting the best outcome from a transaction once it has occurred. A lot of people make the mistake of spending most of their energy on the structuring of the transaction. It is important but it only becomes important if the sale is achieved.
To do this, you need to get an objective assessment of how the business compares in its market, its competitive position, and what, if any, impediments to sale exist – all the things a buyer will look at and look for when they assess your business. Most buyers believe that we are currently in a buyer's market and will try to drive down price expectations. Whether or not you are in a buyer's market depends on your industry segment but regardless of this, you are in a competitive market. Buyers may be comparing your business with similar businesses but also opportunities in other industry segments. Securing a sale at the best possible price is about having your business positioned for sale. Preparation time is needed to achieve this so talk to us well in advance of putting your business on the market.
Many business owners believe it will be easy to sell their business for the price they want.
However, with many more businesses for sale and fewer buyers, smart business owners do not wait and see; they take control of their own future by checking the value of their business on a regular basis as part of their family wealth creation strategy and reduce any chance of what we call 'value gap' risk occurring.
Working closely with you as your Value Improvement Business Advisers, we look at your whole business (not just the numbers). We also cross-check our assessment against the largest and most accurate valuation benchmark data to validate our calculation. Call our team in Ballina or Byron Bay on 02 6686 3000.