Selling a small business can be both involved and time consuming, so it pays to plan it well and to be business-sale-ready when you go to exit.
When selling your business, keep in mind both your financial and non-financial goals. After all you want the best possible return and outcome for your business, from your many years of investment and hard work.
Selling your business privately will often provide the best return, especially if there is a strategic reason for someone purchasing your business. When working with buyers watch for competitors disguised as ‘buyers’. They may just use the opportunity for gathering knowledge on your business, systems and customer base. Once you have ascertained the prospective buyer is genuine, you need to reassure yourself the buyer has the appropriate business skills, courage and finances necessary to buy your business. You may choose to use the services of a business broker, or list it for sale yourself. Many businesses end up being sold to external buyers by going to the market - be it through specialist online NZ Business for Sale websites like nzbizbuysell.co.nz, business brokers or word of mouth.
If you sell your business to another company (maybe a competitor or a similar business), you may be able to get your price and walk away with no further financial ties to the business. If it’s a new business buyer, then there are likely to be more questions on how it works, and a transition period to learn the ropes. If it’s a corporate buyer, they may want you to remain on a contract basis to embed the business.
Selling your business to a business partner, manager or to your employees has a number of advantages. These people know your business well, and that is likely to make the transition easier and quicker. It is unlikely you will be required to prepare the same level of documentation that might be required for an external buyer. A management buyout is more likely to result in stability for the existing staff and business, and it is unlikely you will need to stay on for a transitional period.
Passing on or selling your business to a family member is more about succession planning and having a sufficiently interested, motivated and capable family member that is suitable. They must be enthusiastic, willing and, importantly, be able to take over your business. It pays to have a formal process in place to prevent any misunderstandings or family issues. This ensures transparency and encourages open discussion.
Whether you have only owned your business for a short time, or have had it many years, it pays to have an business exit strategy in place to ensure you get the best outcome when it’s time to sell your business. If, for some reason, you have very little to sell, your options may be limited to just closing or liquidating your business. When considering closing or selling a business, it is important to get professional advice.
With the proper knowledge, advice and preparation, you will get your best result when it comes to selling your business.