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How to position your business for sale and achieve maximum value
Only about 5 percent of vendors that we work with have properly prepared their business for sale. Most often they come to LINK when they are burnt out, in ill health, or have simply decided it’s time to retire. Here’s a guide on how to and when you should go to market.
Since your business is an investment, you should always be examining its growth potential. That means managing it so it can be sold—even if that’s not your immediate intention.
Any time you sell a business, you want to show a positive outlook and you want to show a positive trajectory. You don't want to go into market with a business that's been losing market share, losing customers or losing revenue or worse still, losing profit. It paints an ugly picture.
For some reason business owners always think selling a business is as simple as putting an add up on a few websites. The truth is that the more you prepare your documentation and presentation of the business the more buyers you will attract and the more attractive your business will appear to those buyers. Just as you clean up the rubbish in a house and give it a new lick of paint, so too a business can benefit from the right preparation.
Market your business properly
I’m constantly amazed at the vendors who spend $50K a year marketing to grow their business investment for the past 10 years and then don’t want to spend any money on marketing the sale to extract those 10 years of value. Marketing, doesn't mean telling your suppliers and customers your business is for sale. But the more buyers that are interested in purchasing your business, the higher the price you can command.
The hidden enemy to the sale
Quite often, you see people that attempt to raise capital or go to market on their own or entertain a buyer on their own or hit the market ill prepared for the information a buyer is likely to require. Most often, the business owner will lose focus on the business and the business has a downturn when they need to be showing an upturn instead. In fact, an astute buyer will try to bamboozle a vendor with all kinds of request to push their focus off the business and to entrench them into the sales process, allowing them the upper hand in negotiations.
This is why a business brokers role is so important. We know what sort of information you should prepare, what buyers are looking for and which loose ends need a tidy up. We work in your interests to create competitive tension amongst the buyers, we manage all the relationships and keep buyers moving forward and know when to push back on requests for information unnecessarily, all while you concentrate on where your expertise lies; running your business, and keeping the numbers looking positive.
With the business owner working on the business and the right broker managing the entire sales process you can rest assured you will get the best results.
That's quite often why we suggest you use a broker because they're a neutral party. They're handling those relationships. They're keeping in touch with them. they're keeping the flow going, and leaving you to run your business which is what you're best at.
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LINK Australia, Managing Director