WHAT IS THE PROCESS WHEN SELLING YOUR BUSINESS?

Selling Your Business – Get Sale Ready

 

A considered approach is the key to a successful sale of your business. Prior to selling, recognise that the business is made up of a number of components and clarify what will be included in the sale.

 

Business name, company assets, and associated intellectual property are factors that can impact the valuation process and will direct the strategy and negotiations. Their inclusion or exclusion must be made clear in the initial stages.

 

The standard form of sale includes goodwill and assets. The purchaser is also usually assigned related major contracts. In the SMW market it is usual for the business to be sold as a going concern with the purchaser continuing to trade under its own name/entity.

 

In some cases, the vendor may transfer ownership of the entity that owns and controls business operations, as the form of sale. The purchaser will then take on the company’s assets and liabilities.

 

Read more details about Selling A Business here.

 

Is it easy to value a business?

 

A number of approaches can be employed to value your business, and many elements are taken into consideration. For example, reason of sale, operations history, the industry in which the business operates, its market share and barriers to entry help determine your business’ value.

 

Return on investment (ROI) focuses on using net profit for valuation. Net worth is calculated factoring assets (tangible and intangible) against liabilities. Price-earnings ratio may be requested by potential buyers.

 

Our financial expertise will assist with all aspects of valuation. Do you know how to accurately calculate goodwill, or predict future assets in today’s climes? Do you understand entry cost valuation?

 

Searching for the perfect selling price means evaluating and combining a comprehensive list of financial aspects. Avoid undervaluing by engaging the Barrett Walker team to determine a fair market value for your business.

 

Preparing the sale of business checklist
 

Selling your business means amassing all necessary materials for the financial adviser you will likely engage, as well as your potential purchaser. This includes but is not limited to:

 

• Comprehensive financial information spanning at least a few years.
• Details on any registered securities that require releasing.
• Business paperwork i.e. records and forecasts, market analysis and so forth.
• Forms to transfer the necessary required licenses.
• Details regarding online aspects i.e. registered domain names, emails, and social media passwords.
• Legal information pertaining to your business, from taxation details to shares, insurance etc. 
• Relevant employee details. Pre-discuss entitlements as this may impact the net cash you will receive at settlement and so this information will inform strategy and negotiations.
• Necessary transfer of lease forms. Negotiate releases from guarantees.
• Materials required to ensure utilities transfer, as well as internet and mobile services.
• Negotiated intellectual property, i.e. business databases, business name if transferring.
• Information for transfer or termination of third party contracts. Viability will need to be discussed with all parties.

At Barrett Walker we’ll help you determine what is necessary in your circumstances, making sure the execution of Contracts of Sale and all associated transfers during final settlement and handover run smoothly.

 

Seek legal, valuation, accounting and tax advice 

 

Without the necessary steps it is possible to overlook certain procedures, and accidentally leave yourself open to the unexpected. The multidisciplinary structure of our firms allows access to the necessary expertise.

 

Legal advice from Barrett Walker Lawyers ensures the agreement accurately reflects a client’s intentions. At Barrett Walker CPA we can help you understand the tax implications of the transaction.

 

Get in touch today for a free legal consultation regarding the possible sale of your business.