Selling your business is one of the most important decisions you’ll have to make. Before you take the final plunge, it is important to understand the various steps including an understanding of the sales process, making the business sale worthy, determining a price, finding out potential buyers, the entire process of price negotiation and preparation of a Contract of Sale and other documents.
8 Steps to Follow
Once you are thinking about selling off your business, you can follow these suggested steps to ensure a hassle free end to end experience.
1. Think, understand and decide – Before you take the final call, it is advisable that you think well and understand the consequences of your decision. If you are planning to sell your business as you are undergoing financial hardships or finding it difficult to comply with laws and government regulations, then try to understand whether the problem can be solved by seeking help of professionals. In particular, an insolvency or turnaround specialist may assist.
2. Engaging Professionals – When you decide to sell your business, you might decide to undergo the entire process on your own or you might decide to engage professionals on your behalf. Selling your business involves several steps and the processes are often complicated and lengthy.
Thus, it is always advisable that you engage the services of reputed professionals with credibility and experience who can help you understand and comply with all the regulatory requirements. Engaging professionals is an expensive affair and you should do a thorough background check before you appoint someone to act on your behalf.
3. Ascertaining Valuation– Once you decide to sell off your business, you should ascertain a valuation of the business, including all the assets, goodwill of the business and estimate future profits. Make sure that all your financial information is updated and current. Remember a valuation is an estimate. It is no guarantee of market price.
4. Determining Price and Finding Right Buyers – The next step will obviously be about deciding the right price of your business. Quoting an exorbitant figure might scare off potential buyers. A professional accountant or a business advisor may assist you in determining the right price of your business after considering the valuation of the business. Finding the right buyer is also important. Proper advertising will help you in this regard.
5. Preparation of Contract and Negotiation – Once a buyer has been found, it is important that a contract of sale is prepared and is negotiated upon. A written contract of sale should be carefully prepared along with all the important points including – the sale price, the deposit amount, the settlement period, the transfer and handover requirements and arrangements for existing staff. In New South Wales, the Contract of Sale is to be prepared by a solicitor.
6. Consider the Tax Implications – When you are selling off your business it will draw several tax implications including the Capital Gains Tax (“CGT”) and Goods and Services Tax (“GST”). Carefully understand and calculate the liability incurred and follow the necessary steps to pay them.
7. Complete the Necessary Paperwork – A transfer of business may require completion of paperwork and submission to several authorities.
8. Take care of the existing employees – When you are transferring a business, your old employees may continue employment with the new owners or they may cease employment. Whatever be the decision, communicate with them and provide adequate notice and severance payment to them.
How Can We Help?
Selling your business is a complex proposition and you will need to seek the help of several professionals at various junctures to get past the rigmarole of legal and regulatory requirements.
At Owen Hodge, our clients get access to a team of legal professionals who are highly experienced in all aspects of the legal complexities involved in a process of selling your business. We always endeavour to ensure that your best interests are represented. If you have any queries in relation to sale of business and following negotiations or would like to speak to one of our legal experts, please feel free to contact our team at Owen Hodge Lawyers on 1800 770 780.