Selling your business shouldn’t be a spur of the moment decision. Succession planning should be looked at over a number of years to determine the best road forward. Not only do you have to decide on either passing your business down or selling it but you also need to look at the tax implications of selling your business. It may be that by selling your business too early and not consulting your accountant you could have missed out on the small business concession, which could have resulted in you paying little tax, if any.
There are two key components to a business sale: structuring the transaction and positioning the business to the market.
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 structuring is about ensuring the vendors secure the most efficient and effective outcome from the sale.
Positioning the business for sale is all about ensuring that you achieve a sale and that you maximise your price. It covers areas such as ensuring there are no hurdles within the business that will limit its saleability & ensuring that operating performance is as good as it can be. Positioning also includes identifying the best time to take the business to the market.
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.
Discuss structuring first with your advisers to help identify any key decisions that need to be made but put most of your effort into positioning the business. This is why this process should be commenced a number of years from your desired sale date.
To do this you need to get an objective assessment of how the business compares in its market, its competitive position and what will make buyers look to purchase your business.
Securing a sale at the best possible price is about having your business positioned for sale. Preparation is the key.
If this is you, maybe it is time you contacted us for more advice.