Six business exit strategy tips to maximise your business sale

Category: Finance

Attention: open in a new window. PDFPrintE-mail


With a new study claiming that 76 per cent of business owners currently have no business exit strategy in place, here we bring you six hot tips to maximise the sale of your business, courtesy of RSM Bird Cameron. 

Andrew Graham, national head of business solutions at RSM Bird Cameron, says that even if owners are not ready to sell right now, a business exit strategy is something they should be thinking about so they are prepared when the time comes.

“At least three to five years are needed to properly prepare for the sale of a business,” he explains. “Business owners need to be aware of the impact of tax concessions, which ultimately reduce overall tax liability. This can have a fundamental impact on both the price the business is sold for and the ability to extract the maximum after tax benefit.”

Six business exit strategy tips

1. Prepare for the sale at least three to five years prior to selling

Start by getting the business independently valued and assessed so potential buyers can see what the business is worth, what the annual turnover is and how much tax is paid each year. Another consideration is how much capital gains tax will have to be paid when the business is sold and how a seller can go about minimising this. RSM Bird Cameron’s thinkBIG 2012 showed that 55 per cent of business owners are not aware of the tax concessions available on the sale of a business. ExitLG

2. Strengthen ties with key customers and draw up contracts where possible
Strengthening customer contracts is a great way of adding value to a business. Review your biggest customers and whether there is a contract or mutual agreement in place. Having hard copies of contracts with your customers will inspire potential buyers' confidence. Contractual revenue is worth more than uncontracted revenue.

3. Train staff to run the business without the owner being present
Having well-trained staff in place is of huge benefit to any business. Buyers will also want to know if current staff will stay on after the owner leaves. Profit and business performance should be attributable to the management team, not the exiting vendor.

4. Speak to staff about selling the business
Speak to staff about the sale of the business to ease concerns about their future and ensure the team is motivated, incentivised, accountable and locked in.

5. Prepare documents for sale of the business as early as possible

Having the relevant documentation ready early will show potential buyers that you are committed to ensuring the sale process goes smoothly and will assist in managing the due diligence process.

6. Do not sell if the timing is wrong

Be patient and be prepared to wait until the right buyer is found to maximise your sale value.

Follow @mybusinessau on Twitter for breaking stories throughout the day.

Register now to receive the FREE weekly My Business Headlines e-newsletter, which every Tuesday morning delivers all the latest news for SMEs straight to your inbox. Find out why you should join the SME Association of Australia.






blog comments powered by Disqus
Share |

Government news for business

  • How to reduce risk when dealing with other businesses
    As a small business owner, dealing with dodgy companies is frustrating, time consuming and costly. To reduce the risk, try the new ASIC Business Checks app.
  • Are you PIN ready?
    Changes being introduced from 1 August 2014 will require your customers to use their Personal Identification Number (PIN) instead of a signature when making card payments. Find out how this affects your business...
  • Need help resolving a business dispute?
    If your small business is in dispute with another business, the first step to a successful outcome is finding the right help.

Whitepapers

For SMBs Security can often be a daunting and ongoing challenge to ensure all entry points are secure and up to date.

To get on top of the threat, click here to access a Symantec.cloud White Paper and discover:

  • The top 6 security trends SMBs need to protect yourselves against
  • A Security Essentials checklist - the essential security controls required to cover these threats
  • How Cloud Security services can offer significant benefits in security your business