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Selling Your business? Follow my sure-fire first steps -PART ONE

Before you start talking to potential purchasers, you need to have a plan in place to help with negotiations and drafting a contract.

1.Your business structure

There are a number of structures that can be used to run a business, and how you sell the business depends upon your structure.  You need to understand what you are selling, and who it is owned by.  For example:

  • Are you selling a company?
  • Are you selling the business and keeping your company?
  • Are you selling your business as an ongoing business?
  • Are you only selling assets of the business?

2. What physical assets are you selling?

You will need to list the items you intend to sell in detail.  It is important to exclude items you don’t own, for example, shelving or furnishings that belong to the landlord,  employees, yourself or items that you have rented.

Consider how you will deal with any stock, including lay-bys and gift vouchers.  Do you want to undertake a stocktake prior to settlement?

3. Non-physical assets

You will also need to list the non-physical assets you are selling.  These include:

  • the business name
  • domain name
  • email addresses
  • website
  • social media pages
  • marketing collateral
  • logo / any trademark and
  • intellectual property.

If you own a registered trademark, there are certain requirements for transferring the registration to the purchaser, which will need to be incorporated into your contract.

4. Do you have a lease?

If you are transferring a lease, you will generally need the consent of the landlord.  Consider making contact with the landlord early to find out what requirements must be satisfied to transfer the lease.  You are also likely to be responsible to pay the landlord’s expenses in transferring the lease, so keep this in mind when budgeting.

5. Employees

You will need to plan for how employees will be dealt with in the sale process and understand your obligations in relation to paying outstanding employee entitlements. 

6. Get your financials in order

A purchaser will want to inspect your books so make sure they are all in order!  You may also need your accountant to provide a statement for the purchaser.  In Victoria this is called a “section 52 statement”. Check with your accountant about your financials, and about any tax implications arising from the sale. Is this all a bit daunting?  Contact me for a complimentary consultation to discuss how I can assist with your sale of business.