There are many reasons that people decide to sell their businesses including...
 Exit Strategy – This is the best way to approach selling your business in a planned and considered fashion. Many people spend their lives building up their businesses and then find that their children have grown up, pursued their own careers and do not want to be involved in the family business. So, how does one extricate oneself from the business while at the same time protecting the jobs of the loyal employees and the clients that have been built up over many years? The answer is in careful planning and expert advice. The best exit strategies are those that are planned several years before the targeted exit time.
Wealth Accumulation – This is the sale of a business prompted by the owner wanting to realize their investment in their company. The motivation may be to invest in other areas or part of an exit strategy. The sellers that fall into this category are prompted more by sale price than by loyalty to staff and customers. Cash Realization – This type of sale usually has more of a sense of urgency than the previous two. It is usually brought about by a need for cash in other areas and the inability of the company to generate the type of cash or income required. Cannot Cope – The most emotive sale, driven by problems and stress often unrelated to the company itself. This type of sale tends to have a level of urgency and emotion and price is not the ultimate goal. This type of sale does not usually generate the best result for the seller but can create opportunities for purchasers. Part Sale – A business owner may decide to sell off part of the business. This could be linked to a downsizing strategy, but more likely it is when part of the organisation has problems or no longer fits with the culture or strategic direction of the company. However, that part of the company could be very attractive to another company if synergies can be found.
What to think about before selling:
With any of the above drivers it is important to consider the following before committing to the sale process – What are you selling, eg. Are the assets to be sold with the business or separately? Is the business being sold as a going concern? Is the goodwill for sale? Is there proper title for each asset? Do I need to invest in repairs and maintenance of assets before the sale? What information will be provided to the potential buyer, eg. Accounting records, the accuracy and auditability of statements made to entice the buyer. Can the buyer can continue to run the business successfully during any transition period following the purchase – eg. What training will be required by the purchaser and how will introduction to established customers be effected. Are the financial records of the business up to scratch and what should be done to get them into shape? Eg. Detailed information about business debts or loan and whether any debt will be assumed by the buyer, etc. Is the business in leased premises? If it is, will the landlord agree to transfer the lease? Tax implications – eg. Have I considered the implications of Capital gains tax, value of stock, roll over relief, etc.? The business market and the nature of the competition. Would I be happy to sign a restraint agreement limiting my ability to enter into a similar business for a period of time? Confidentiality. How will I manage my staff and customer relations during this potentially destabilising process.
Involve Kleinhardt
As you can tell from all these questions, it is important to speak to an expert before selling your business. Kleinhardt can give you the right answers for all your questions and we will provide advice on issues you have not even thought about. Kleinhardt are also able to provide forward projections and opportunities which could impact the value of your business. We will be able to provide confidentiality to the whole process and minimise any impact on the business caused by the sale. We can advise you regarding advertising and promoting the sale and whether it should be done locally or interstate. Planning ahead can make and enormous difference to the end result.
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