Keeping your business thriving and profitable during the COVID-19 pandemic is no easy task. For business owners who were hoping to sell companies on favourable terms, the COVID 19 pandemic has hit the world at a most inopportune time. The coronavirus outbreak has affected several aspects of our lives, including the sale of businesses as buyers and sellers gauge the overall effects.
Selling a business is a stressful task that involves much more than just technical negotiation. As always, the terms of the sale will depend on several factors such as the timing, reason for selling, current status of operations and business structure.
Many businesses have become unsustainable in the aftermath of COVID 19 as it’s challenging to continue paying staff salaries and managing overheads.The good news is, despite the current circumstances, it’s possible to sell your business for a healthy profit. A strong customer base, reliable network of industry contacts, consistent profits and a positive brand image help attract potential buyers.
Check If You’re Eligible for Government Assistance
The Australian government has offered several relief packages for small businesses to help them sustain losses during the COVID 19 period. These packages are temporary, scalable and targeted packages that can be customized to your unique requirements.
How to Negotiate a Sale of Business
Keep all stakeholders updated on what you plan to do with the business. Ensure that you call in overdue payments from debtors. You may need to consider negotiating to see what they’re able to repay under these circumstances. Keep your customers informed about delays in processing or delivery of products and services. For more clarity regarding your responsibilities towards customers, refer to the prescribed government regulations.
The most reliable way to get a good price for your business is to get your business evaluated by a professional. This not only helps price your business reasonably but also lends credibility to your negotiation. Business sales brokers can help find prospective buyers so you can focus on other tasks.
Most importantly, put yourself in the buyer’s shoes and see if the deal appears attractive. Quantify as much information as possible, including supplier interruption, cost of alternative suppliers, delayed or lost sales and margins, the impact of layoffs and business interruption insurance claims. This will help buyers value your business properly.
Prepare All Your Documents
Keep financial statements, tax returns and other information including equipment or inventory ready before sale. Consider including other relevant paperwork such as your current lease and an updated copy of the operating manual. Provide prospective buyers with ‘business goodwill’ in the sale, which should include customer, supplier, vendor contacts and information on trading services etc.
It takes experience and consistent practice to be a skilled negotiator. Most people sell their business only once in a lifetime and it’s essential to stay on top of the many things that can go wrong during a deal.
As seasoned negotiators, Owen Hodge Lawyers provides legal, financial and tax guidance to those looking to sell their business. Our trained legal team can help you at every stage of the sale process from start to finish.