Rushing the sale
Selling your business should in theory be an objective decision, though in reality it is often laced with emotion. There can often be an urge just to get it ‘out of your system’. However, the more time, planning and strategy you put into your business sale the better off you will be. Give yourself plenty of preparation time during which your focus should be on the following matters:
- Showing potential buyers that the business is capable of being profitable all year round
- Reducing all your costs and inefficiencies
- Building up a good management team
- Improving the quality of your products and services
- Developing new products and services
- Growing your online potential
- Gaining new customers
- Building relationships by using written contracts rather than just verbal agreements
- Developing business plans which enable your managers to keep on going once you leave
- Resolve any legal or tax matters
Not considering what is actually for sale
Remember that your business is made up of lots of different assets which can be divided. More to the point, there are some assets which you can sell and others which you can retain. Businesses almost always have a number of intangible assets such as intellectual property and goodwill that can be retained or added to the price of your business when you sell it. Consider speaking to a business lawyer if you want to know more.
Not doing Due Diligence
Due diligence is really just checking your facts. If you are selling your business you really need to check whether:
- The buyer has or can get the required finance (so they pay you if you sign a contract with them)
- They have long-term plans for your business (so your legacy remains)
- They have experience in running a business
Problems at the handover
Sometimes business sales go wrong on some very practical and simple matters when it is handed over. Make sure you plan the handover process with the buyer. The details and timing of the handover should all be written into the sale contract. You should also speak with a business lawyer about preparing a sale of business agreement to ensure all these details are looked after. There are also a number of other aspects of the handover which you should consider, such as:
- Introducing the buyer to your most important clients
- Introducing the buyer to your most important suppliers
- Introducing the buyer to all your employees
- Making sure you hand over all keys and other security devices such as alarm codes
- Notifying all of your utility suppliers and changing ownership or cut off the services so you personally aren’t charged going forward
Not considering your legal obligations
There are a number of other legal obligations you need to look after. Such as:
- Do your business licences need to be cancelled or can they just be transferred?
- What is going to happen to your trademarks?
- Have you fulfilled all your final tax obligations and notified the ATO?
- Do you need to notify the Australian Securities and Investments Commission?
- Do you need to cancel any local licences?
- Do you need to transfer or assign the lease?
- Should you transfer title of any of your assets?
- Do you need to organise employment termination payments for your employees?
- Have you notified your creditors?
If you feel you would like any assistance with any of this please consider speaking to a business lawyer or getting online legal advice.