What to consider when selling your business
Q: What do I need to consider if I want to sell my business?
The first consideration relates to identifying the likely purchaser.
Do you intend to sell on the open market or through a family succession strategy?
If you intend to sell within the family, it's important to have a formal succession agreement in place to avoid conflict among siblings. If the business is being sold on the open market, an owner must ensure that this plan does not cut across the expectations of a family member.
The next consideration is to decide what will be sold: the business or the underlying structure that owns the business (usually a share sale where a company carries on the business).
Sometimes careful planning in the lead-up to a sale can achieve big tax benefits.
You then need to consider the factors that will influence the ultimate price. Sometimes it can be better to separate out non-core assets, such as the land it sits on, to make it more affordable.
It's also a good idea to pay out retained earnings to trim down the value of the balance sheet.
Finally, ensuring that assets are ready for sale will involve conducting due diligence or a stocktake around items such as intellectual property and personal-use assets on the balance sheet, ensuring that trade debtors and creditors are up to date.