Looking to sell your business. There are some important facts that you should know.
Selling your business is an emotional process, you must consider how it will affect you financially in the future. This is especially true if you have owned and operated your business for a long time. Speak to your accountant first to ensure that your financials are up to date and ready to present to the market, also discuss any Capital Gains implications with your accountant before going to the market.
The business purchaser is looking to purchase a business that is profitable with an upward trend in profits and takings. The Purchaser generally looks at businesses in an industry that he or she has previous experience in or is a business in a growth industry they feel they are capable of operating. These purchasers are hands on business operators and wish to work within the business they are purchasing.
Larger businesses with good structures, systems and management teams in place appeal to the business purchaser with a much larger capacity to purchase a business. These purchasers are looking at a rate of return on their investment and the future growth of the industry they are purchasing in.
If your business is under financial stress and you are finding it difficult to comply with government regulations, then your business may not be saleable. Remember, a purchaser will only pay for profit. There are no wood-ducks – if a purchaser purchases a rundown business they will generally only pay for the plant and equipment owned by the business with the hope they can turn the business around.
Market sentiment also plays a role in the saleability of your business, there are 2 kinds of markets:
Sellers’ Market: when there are more buyers in the market place than sellers.
Buyers’ Market: when there are more sellers in the market place than buyers