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Making the decision to sell a business is often a difficult one, especially for owners who have had the business for many years. At Corporate Synergies we are aware of the human side of selling a business and make sure that our vendors are comfortable through involving them and keeping them well informed of progress. Once the decision has been made to sell you will have certain expectations about what the business is worth and what you may be able to net from the sale. We need to assess your business as a buyer would and discuss the result with you until we reach agreement on how much it is worth. We may also involve your Accountant as they can sometimes help to interpret the figures and can offer comments that may influence our assessment. Unlike the property market, a business value can vary in many different ways. This can make it difficult when comparing your business’s value with other similar business’s that have sold in the past. Even though sales and profit figures may be almost identical, many other factors have to be taken into consideration. These include: Products, (comprising any proprietary lines, brand names etc.) your existing customer base, years of operation, results history, exclusive supply agreements and lots more. Corporate Synergies will take all of these factors into consideration and talk to you about what you can reasonably expect to receive from the sale of your business. Information
Information When you first enquire about selling your business we will send you a questionnaire so that we can gather all of the information we need to make an assessment of your business. We will also ask you to supply the past 3 years accounts, a plant and equipment schedule, details of any leases and details of the monthly turnover for the past 24 months. Being constantly in touch with the market we are in an excellent position to give you an assessment that includes a realistic asking price and will often provide a price range for you to help manage your expectations. Our experience has also taught us that even though there is nothing wrong with testing a price to gauge the response, a business that is overpriced will normally sit for months until the price is adjusted to meet market expectations. By this time most buyers already know about the business and are reluctant to re-visit it even though the price has been adjusted. This is why we like to discuss the assessment at length with our vendors, to ensure we avoid any disappointments and get the best outcome for all parties.
The best time to sell The best time to sell a business is when it is performing well. Even better if the business has had a number of years growth in sales and profit and all signs indicate that this will continue. A steady result is also good and many buyers are looking for a result that they can depend on considering that they will be outlaying the money to purchase the business in advance of the results. A declining sales and/or profit figure will devalue the business as it is less attractive to buyers. In some cases it is necessary for buyers to put considerable working capital into a business before it will show a reasonable return. If a business like this is not priced accordingly it simply will not move. Corporate Synergies personnel will discuss all of these factors with you after you have supplied the information we require to assess the business. We have found that some owners will try and hold onto their businesses for too long. They sometimes lose the drive and motivation necessary to continue building the business or even to keep it at the same level. It is human nature that what was once exciting and fun will not always retain the same attraction and challenges. This is a common mistake and we urge business owners in this position to contact us immediately to discuss the option of either “preparing the business for sale’ or ‘listing’ it for sale straight away. The reality is that a business in this phase will have passed its “premium” sale value and be on a continuing down hill slide the longer these owners hold on.
Marketing your business The correct marketing plan is critical. Corporate Synergies will show you the best way to take your business to the market. Some business owners are very sensitive about any use of the business name up until a genuine buyer has been identified so that staff, suppliers and customers are not exposed too early. Typically the larger businesses will be advertised in the Australian Financial Review and the smaller ones in the Sydney Morning Herald and equivalent in other States. Use of the web site is becoming an important part of marketing as buyers can look for a suitable business whenever they have time. Finally, the Broker's own database is a good source of people who are currently looking for a business. Good structured use of the information on the database can make a big difference to the overall marketing effort and can often lead to finding a buyer before the business is advertised.
Brokers Duties The broker will negotiate a commission fee for selling a business in advance. The seller will be required to sign an 'Agency Agreement' that clearly outlines the terms and conditions on which the business will be sold. This is important so that there is no illusions later as to what the parties have agreed and the quantum of the fees agreed upon. The broker will screen all inquiries carefully to ensure that they are suitable for the business and will insist that all prospects requiring more information about the business will complete the necessary documentation including a 'Confidentiality Agreement' so that information supplied to a prospective purchaser remains secret. After completion of such documentation to the satisfaction of the broker, a business profile or memorandum about the business (prepared by the broker passing on the particulars provided by the vendor) will be provided. The name of the business and its exact location are generally still protected until the prospective purchaser indicates that they would like to meet the vendor for a business inspection and to discuss a possible offer for the business. The broker will arrange a meeting convenient to all parties and negotiations will begin to try and reach agreement. The broker will assist throughout to bring the parties to agreement and will finally instruct the solicitor acting for the vendor to prepare a 'sale contract' for the business sale. At this point both the vendor and the purchaser will be able to go over the contracts with their respective solicitors who will help their clients reach a stage when contracts can be exchanged and a completion date agreed. A deposit of 10% will be paid normally to the broker leading up to the exchange of contracts or at exchange of the contracts for sale. The broker will hold this deposit "in trust" pending completion of the sale.
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