Getting ready to sell
To get the best return on your investment in a business, you need it to be in the best shape when it goes for sale. Here’s some of the things you should look at.
Potential buyers will want a thorough look at your finances to make sure they’re buying a sound, profitable business. If your finances don’t reinforce your asking price, you may need to sell for less or reinvest to make the business more attractive. To make sure your finances are in the best shape for sale:
· sell assets your business doesn’t use
· stop investing in long-term projects
· produce a realistic financial forecast — a good business advisor will spot an exaggerated one.
Potential buyers will ask for your business plan, so if you don’t have one, create one. It should show your business works efficiently, has good management and how you plan to grow it.
A succession plan puts in place steps to run your business successfully without you. Having a plan is essential if you’re thinking of selling or taking a back seat role.
Make sure all machinery and other equipment is well maintained. Give your premises a thorough clean and fix any maintenance issues.
A new owner will want to hit the ground running, so:
Lock key suppliers and customers into contracts. Sort out looming problems, eg paperwork for a compliance change. Get up to date with health and safety standards and other obligations you have as owner or employer.
Nothing raises the alarm to buyers like finding out there’s a legal case pending you failed to mention. Before you put the business up for sale, make sure you:
Resolve any legal disputes
protect your intellectual property
own all assets on the balance sheet.
Who’ll buy your business?
Finding and negotiating with potential buyers is time-consuming and specialist work, so think about hiring a business broker to do it for you. A broker will know which type of buyer will be interested in your business and how to approach them. Buyers may be:
· employees — this is known as a management buyout
· suppliers or customers
· investment groups.
If you are thinking about selling your business and need help to get it fully ‘sale-ready’, talk to us first. Just go to www.businessexit.co.nz to make a free, no-obligation 15 minute appointment to discuss your situation if total confidence. Let us show you how we can help you to get your dream selling price.
Article originally published by business.govt.nz