How to Get the Best Result If You Want to Sell Your Lifestyle Business
Posted on: 28 February 2022
Several million Australian baby boomers will retire in the next few years, and if you've been running your own business all your life, you may be thinking about joining them. Yet, you may not simply want to close the doors and walk away but want to make sure that your business is given to a safe pair of hands. How can you prepare for that momentous day, and how can your accountant help you to get across the line?
Preparing Your Team
You should give yourself a couple of years of preparation before you put your company up for sale in an ideal world. During that time, you should pay close attention to all of your processes and procedures and ensure that your books and records are in perfect shape. You should also make sure that you have a second-tier management team in place who can run the business without your presence. After all, the business is worth a lot less if its future is dependent on its founder, which is a very important factor to remember. Make sure that you do not have cosy relationships with key customers who may be tempted to go elsewhere if you're not around.
Interpreting Performance
A prospective new buyer will want to be sure that the business has a solid background and is likely to retain or improve its annual income. They will want to look at the accounts for the last few years, and you should present them in a uniform fashion. You'll want to show your sales, cost of sales, overheads and net profit from the last few years in a side-by-side table. Ideally, this will depict a gradual increase, but if it doesn't for some reason, be prepared to add notes to explain why that should be the case.
Presenting and Adjusting Your Figures
The buyer will be particularly interested in the bottom-line figures and how much they are likely to retain once all costs and taxes are paid. You may want to adjust the figures you present if some of the costs that you currently incur as part of your overheads may not be repeated under the new ownership. For example, if you operate a company car through the business, but this is not absolutely necessary for normal operation, you can add this back to your table as a "business owner benefit."
Making Preparations
These are just some of the handy tips that you can learn from an experienced accountant as you prepare for the sale of the company. Remember, start early if you want to present the business in as good a condition as possible.
Share