We've been there
We've done it
We know what a buyer is going to ask



PREPARING YOUR BUSINESS FOR SALE





Business Exit Planning, Exit Readiness, call it what you want, but the more you can prepare a business for sale, the quicker and more efficient the sale process should be, and this usually results in a higher sale price being achieved, with less warranties hanging over your head into the future.


If you ask for our help, we'll spend time understanding why you want to sell, where you are now, and how we get you where you need to be.


We’re often asked what does “preparing your business for sale” involve? There’s no one-size-fits-all answer to that question, but we've included a few ideas at the bottom of the page that go beyond the basics to get you thinking along the right lines.


They are just a few ideas of the types of things you'll need to consider, but as you can see, getting the business ready for sale could take anywhere from 6 months to a year, depending on how progressed you already are.


We’ll also take you through what to expect from the due diligence process, and the questions a buyer is likely to ask. This (vendor due diligence) allows you to resolve any issues before the sale process starts, so the business is presented ready for sale and in its best possible light.


Our teams in Brisbane, Melbourne and Redcliffe can advise and assist you with planning your exit readiness, preparing your business for sale and other aspects of exit planning.



HERE ARE A FEW IDEAS TO GET YOU THINKING



is the business STILL RELIANT on you





Remember you’re selling the business, so once you do, you’ll be gone. Preparing the business for sale means ensuring the business has everything in place to operate without you: processes, systems, relationships with key suppliers and customers transitioned, etc. You may need to delegate this to your key managers, or you might need to hire a CEO to replace you. If a potential buyer suspects that your departure could disrupt the business, that risk, that fear, will drive down the price they are willing to pay.



Who is the ideal buyer





You’ll need to view your business from their perspective what they want, what they value, and what they would want the business to look like at the time of sale. Do they value your customers, your product, your systems? Depending on which is important, determines what data is necessary to drive the value proposition. You might not want your business to look like theirs, you might not want to have your financials audited, but the more you do look like them, the more you make those changes, the more evaluable your business will appear.



Clearly explain why you are selling





If you can’t show why you’re selling, the buyer will probably suspect you’re just trying to sell the business is at a peak, and it’s all downhill from there. It’s also important to be prepared to change the business along those lines. If you’re selling because you’re sick of working such long hours, who is going to buy that business?



BE READY FOR THE BUYER TO DO DUE DILIGENCE ON YOU



Vendor Due Diligence could include things such as:



cOMPLIANCE hOUSEKEEPING





Make sure all of your compliance requirements are in order, and collate the proof ready to be provided to the buyer. Ensure things such as:
Tax Returns are lodged, ASIC records are up to date, Company Registers (shareholders, Directors, etc) are up to date, Minutes are all signed and dated, Licences and registrations are up to date, Trademarks and other IP registrations are all up to date, Insurances are current and adequate, etc.



Contractual Housekeeping





Make sure all of your contractual commitments are in order, and collate the proof ready to be provided to the buyer. Ensure things such as: You can provide signed copies of contracts with all of your major customers and suppliers, Current copies of all premises leases and options taken, Current copies of all Employee Contracts, subsequent payrises, and other HR matters such as complaints and investigations, etc.



Customers and the Market





Be ready to explain things such as your route to market, how you win customers, why you lose customers, how you differentiate yourself from the competition, the size of the available market, your sales strategies, your marketing strategies, what is your target market, where is your product positioned, what is the strength of your brand, etc.



Financial Analysis





Be ready for their accountants and tax advisors to go through your accounts and financials. Not just from a compliance point of view, but they will also be looking at things such as: The rate of revenue growth relative to the market, staff costs relative to revenue growth, to what extent you have stripped out costs prior to sale, understated accruals and provisions, overvalued assets or low levels of stock, etc.




selling your business to larger corporation or strategic buyer






Selling your business to another owner is one thing, but selling your business to a larger corporate, who likely intends to integrate your business into theirs, tends to be a very different sale process.


Selling to another business owner, tends to be a financial transaction. How much profit does your business make, and how much will they have to pay for it?


When selling to a larger corporation / business / group, this tends to be more a strategic transaction, meaning they will look well beyond just your profitability, governance and controls. They will look right into your competitive advantages, whether your business advances their strategy, your customer experience, your staff culture and how well that aligns with theirs, the strength of your brand, etc. They will likely also be right across the dynamics of your industry, the prices/multiples being paid, what integration efficiencies and synergies they will likely achieve, the current market conditions for selling businesses in your industry, as well as how many active buyers they are likely to be competing against to buy your business.


All of this adds up to a very different sale process, a very different due diligence process, and a very different tone and level to the questions you’ll be asked – and the answers you should plan to both give, and be able to support.


That’s where we can help. With our years of experience, we’ll help you to be prepared for what they will ask, help you to be prepared and ready to provide the evidence they request to support your answers, and we'll be there to provide the level of involvement that suits you and your budget. We can do the work, or we can teach you how to do it yourself.





The Hidden Persuaders



Brisbane | MELBOURNE | Redcliffe