Business disposal – selling a business

In a previous blog article I discussed Exit planning and how this should be incorporated into your business plan so that you, the business owner, receive the greatest value from the sale of your business when the need to sell arises. However, what happens if you haven’t planned for this eventuality and you are forced to sell? While this isn’t an ideal situation, you will be glad to hear that there are a number of ways you can improve the health of your business in the short term which will increase the value you receive when selling your business.


Preparing the business for disposal

A common cause of sudden business disposal is ill health which leaves the business owner unable to run the business and requires that it is immediately sold. Without the proper pre-planning the business may not be in the best position to be sold but by following the guidelines set out below, the chances of receiving a fair price are greatly increased:

1. Tax planning

This is the most important part of the business disposal process. A tax consultant should review all of the tax implications for the various types of sales in order for you to avoid paying more tax than is required.


 2. Decide on the timing of the sale

This may seem like a strange statement when you already know that the sale of your business is urgent. However, let me take a second to explain it. The more time you can provide for the sale, the more preparation can be done and the better the chance of receiving a favourable amount for your business. If you have a seasonal business where larger profits appear around a certain time of year, if at all possible you should attempt to run the business until those profits can show. Perhaps hire an interim manager who can focus on achieving sales targets. Another reason to hold on the sale is while you wait for audited statements showing the business’s true profit and assets providing proof to the buyer as to the potential value of the business.


3. Business clean up

There are a number of aspects of your business which can be groomed in order to provide an easier sale. Depending on the time you can allow for the sale, these can be anything from the reduction of non-business expenses, reduction of advertising expenditure, disposal of surplus assets to reviewing the management structure.


4. Hire a professional.

A professional advisor is a necessity especially when you require urgent business disposal. They will ensure that your business is prepared and ready for sale, find interested parties and negotiate the sale on your behalf.


Should you need to sell your business, contact Brett on 021 421 4444 for business disposal advice.