Ready to sell your real estate business?

Selling property is the cream on top of a solid rent roll for a real estate business – but what do you need to consider when you are the vendor selling your real estate business?

When

A business owner may have it clearly in their mind when they wish to retire. There may be clear succession to the next generation of the family or to a senior manager. Unfortunately, ill-health and even a pandemic can force changes to the best laid plans.

Three considerations to answer the question of ‘when’:

Personal wealth and assets: Do the business owner and their family have enough personal assets to fund their lifestyle without future business income?

Business saleable: Is the business achieving healthy financial results for the desired asking price?

Personally ready: Does the business owner have personal interests for a happy and active retirement, particularly on Saturdays when for many years these may have been spent attending open homes, auctions and checking results in suburbs of interest?

A yes to all the above suggests someone is ideally positioned to sell. There is no harm in being ready to sell at any time. To cover all possible eventualities, you may consider even answering the three questions above even if a sale is still some time away.

how

As a guide, the sales process could run over five years (as illustrated below) and involve professional advisers, plus family and friends.

Accountant: To review current financial statements and set up the next two years to maximise business performance, in years one to five ensure the maximum Small Business Capital Gains Tax Concessions can be accessed where relevant and in year five ensure a smooth handover.

Lawyer: To prepare robust legal documents, which may include continued involvement in the business after settlement, potentially staggered payments and personal warranties from the business owner.

Broker: Facilitation of vendor and purchaser introductions and acting as a continued facilitator between parties as the sales process develops.

Financial planner: To assist the business owner in reviewing personal assets and ensuring that in five years’ time they will be well placed financially for their future.

Family and friends: Can provide a very different perspective from professionals, particularly on whether the business owner is personally ready to sell. Good luck with your continuing business success, but do not neglect considering the longer-term timing and preparations for the sale of your business.

Getting ready to sell Sales process begins Handover Do what’s next

Years 1 & 2 Years 3 & 4 Year 5

MVA Bennett

YOUR FUTURE, OUR BUSINESS

MVA BENNETT is a Chartered Accounting firm in Melbourne and an REIV strategic partner. Our belief is that YOUR FUTURE is OUR BUSINESS, arising from rich history that dates back to our founding in 1941. Our capabilities are delivered by a team of seven partners and 50 staff governed by the profession’s quality controls.

Why engage MVA BENNETT?

We strive to differentiate ourselves from other accounting firms by seeking to: • Develop agreed wealth goals, by identifying and aligning mutual values and obligations that will underwrite our relationship • Continually meet expectations, with strong communications throughout our engagement • Use cutting-edge skills and tools to achieve our deliverables, and • Practise what we preach

For further information, please contact Nicholas Rodier Partner, MVA BENNETT Chartered Accountants

nicholas@mvabennett.com.au

03 9642 8000. Level 5, North Tower, 485 La Trobe Street, Melbourne

mvabennett.com.au

– MVA Bennett

Please note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their circumstances.