It can be difficult to know when it’s the right time to sell your business. One of the most important things to consider is how much you would like to sell your business for.
Consider using professionals
Selling your business can be a time consuming and complicated process so consider engaging a reputable business broker or other professionals to help.
Business brokers specialise in buying and selling businesses and they might not be as expensive as you think. They can help you understand legal and government requirements and make the process of selling your business less stressful. Find out more from the Australian Institute of Business Brokers.
It is important to check the credentials of your broker or other professional as you’ll need to provide them with a lot of information about your business.
Value your business
Valuing your business is about working out how much your business is worth so you can set the right price when selling. This may include assessing the value of your assets, estimating future profits and working out how much the goodwill that you have established is worth.
Find a buyer
You can advertise the sale of your business to potential buyers through a number of methods, including business brokers or real estate agents, advertising online or in newspapers, or word of mouth. The way you advertise will depend on your business type, industry and contacts.
It is important to check whether there are any requirements in your state or territory about the information you need to give potential buyers.
Negotiate the sale
When negotiating the sale, make sure the information you give about your business is accurate and true. If you say anything or provide information that is later found to be untrue, it may be considered misleading or deceptive behaviour.
You’ll need to agree with the buyer on a range of things, including:
- the sale price
- the deposit amount
- the settlement period
- handover training (if any) for the buyer
- arrangements for existing staff.
Prepare the contract
Generally, an solicitor draws up the sale contract. Most small business owners will ask a solicitor to review the contract, and the contract will also be checked by the buyer’s solicitor.
Solicitors should check that the contract doesn’t include any false statements, and covers all aspects of the sale, including:
- all the relevant assets that are being transferred, including property, equipment, fixtures, fittings, stock, and any rights to use any names
- all the relevant liabilities, including creditors (people or businesses that your business owes money to) and the lease of the business premises
- responsibility for employees and employee entitlements, including whether employees are to be transferred with the sale (if the new owner isn't related to the old business in some way, they don't have to recognise some entitlements)
- statements about what will happen if any issues arise (for example, the buyer decides not to proceed, inaccuracies are discovered in the contract, etc)
- any restrictions on trading in your profession after the sale (to prevent you from competing directly against the new owner).
Take care of your employees
When you sell your business, your employees may either transfer with the business to the new owner or end employment with the business.
It's important to communicate with your employees and let them know whether they'll be transferring across to the new owner or ending their employment due to the sale of the business.
In both cases, a transfer of business ends an employee’s position with you. You must give your employees notice of ending employment or provide payment in lieu of notice.
When employees transfer with the business, you'll need to give all relevant employee information to the new owner. There are some employee entitlements that the new owner must recognise and others that the new owner doesn’t have to recognise.
Find out more about ending employment.
Deal with legal and tax matters
It is important to consider any insurance requirements for your business, such as run-off cover (where you are insured for any legal claims that are made after you sell your business).
Also consider whether Capital Gains Tax (CGT) and Goods & Services Tax (GST) apply to the sale of your business. If your business is registered for GST, you may need to include GST in the price of individual business assets or repay GST credits.
If you are selling a small business, Capital Gains Tax concessions may be available.
If you cannot pay your taxes on time, you may be able to get help through an Australian Taxation Office (ATO) payment plan.
Find out more about taxes when selling your business on the ATO website.
Transfer your business
Once your business is sold, you'll need to transfer your business to the new owner. This includes:
- transferring leases, licenses and permits
- finalising tax returns, activity statements and instalment notices
- cancelling your ABN and transferring or cancelling your business name.
Find out more about what you need to do when changing ownership of your business.