Conversations with Andrew

Preparing your business for sale

Andrew Johnson

It’s exciting, challenging and time consuming to buy a business and run it yourself.

Beyond immersing yourself, in the starting and running of your business it’s just as important to plan for the future. Your exit from the business in the future, and preparing your business for sale is an important section of your ongoing business plan and strategy.

We never know what the future may bring, but we can prepare and consider our options beforehand providing a framework and safety net to protect our interests in the future and best position your business for life’s eventualities.

No one wants to be in a position in the future when a fire sale is required or the selling price for your business is not the strongest it could be.

For those that start a business and enjoy the adventure at some time in the future there comes a time when it needs to be sold.

Planning and taking the time to prepare for this future event is not only wise, but will provide the best chance for you to realise the best return and sales price for your going concern, no matter when that may be.

So many business owners may rush into a sale and do not take the time to position themselves for best results, which at a minimum is 12 months beforehand. Being so involved in the business, dealing with the daily running, challenges, obstacles it’s like being too close to the trees to see the forest.

So, look at all the requirements needed to sell your business in the future and research all the angles to best position the business for a strong result.

Section 52 Disclosure Statement

A Section 52 which is a disclosure statement that the owner of a small business must provide to a prospective purchaser, and this statement follows the legal requirements set out in Section 52 of the Estate Agents Act 1980 for Victoria. Check your own State in Australia to confirm the local requirements and reach out to a professional and expert for assistance.

This statement is required for the sale of a small business in Victoria at a price of up to $450,000. It is usually completed by the seller and their accountant using the form prescribed under the Estate Agents (General, Accounts and Audit) Regulations 2018.

The statement is part of the buyer’s due diligence and sets out the financial performance of the business over the last two years. The statement must also provide the financial performance for the current financial year up to the most recent quarter. Beware: If you don’t provide the statement to the buyer, the contract can be voided.

When to Start

Many people have a love hate relationship with Tax and the ATO, but when selling your business telling a buyer you make extra income through cash is not something they can generally verify. Engaging an expert and professional accountant for your business and making sure all your income is demonstrated in your tax returns is really beneficial.

At least two years before you intend to sell is an ideal planning window in my view, but consider your own thinking on the matter and get professional advice.

When you are ready to sell your business, put together an itemised list of everything included in the sale, write in your own words the story of the business and how a new buyer can be successful as you have been. Think about the advice would you offer them with respect to scalability, your customers, suppliers list and how the business has been run.

Prepare, Position, Organize

Prepare, position and organise everything for a successful sale does not happen overnight, make it easier for a buyer to engage with your story and get excited about owning a business that helps them avoid failure and provides a roadmap for the future.

Selling your business should provide you with the best return possible for all the hard work and effort you have put into it, and it is in your hands to prepare and position your business for a successful sale for your future.

Andrew is a licensed real estate agent based in Victoria who has enjoyed a long business career in Australia and overseas providing solutions and building a referral business. www.maxjre.com

Andrew is a licensed real estate agent based in Victoria who has enjoyed a long business career in Australia and overseas providing solutions and building a referral business.

Speak to us if you are:

Buying or Selling Property

Buying or Selling Your Business

MAXJRE is all about personalised service, community and helping guide our customers to a solution that builds trust, long term relationships and generates referrals for sustainable growth.

Mobile 0473 207 988 Email andrew@maxjre.com

Web:www.maxjre.com

LinkedIn http://linkedin.com/in/andrew-johnson-8435092 Company Maxwell Johnson Real Estate Pty Ltd

Address

9 Gracefield Road, Brown Hill, VIC 3350 www.maxjre.com

www.maxjre.com