Your options when selling a businessThere are a variety of options when selling a business. After all, you want the best possible return and outcome for your business to hopefully maximise the investment you have made over the years.
If you are planning on selling your business privately you need to ensure the buyer is genuine and committed to going through with the purchase. Be aware that competitors disguised as 'buyers' might use the opportunity to scout your business, gathering valuable knowledge on your specific business systems and your client base. Once you have ascertained the prospective buyer is genuine you need to reassure yourself the buyer has the appropriate business skills and experience necessary to make the move. If the buyer is transitioning from a regular job with a guaranteed salary to being self-employed you need to know they have the courage and tenacity necessary to make this transition. A number of sales today now involve the seller leaving money in the business so you may have a vested interest that the business will survive and prosper under the new ownership. Many businesses end up being sold to outside buyers by going to the market - be it through online media like business for sale website nzbizbuysell, newspapers or word of mouth.
If you sell your business to another company (maybe a competitor or a similar business), you may be fortunate to get your price and be able to walk away with no further financial ties to the business. This option requires the most work on your part and is likely to involve a very thorough 'due diligence' process before the sale goes through. If it's a corporate buyer then they may want the owner to stay on, on a contract basis to embed the business. Often this type of sale also requires the owner to sign a 'restraint of trade' agreement.
There are a number of advantages in selling your business to a partner, manager or to your employees. After all, your employees know your business and that is likely to make the transition easier and quicker and it is unlikely you will be required to prepare the same level of documentation you might be required to do 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 be required to stay on for a transitional period, leaving you free and unencumbered to move on with your life quickly. In some cases you may be asked to leave some money in the business.
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 enthusiastic, willing and, most importantly, able to take over your business. In this type of transaction it pays to have a formal process in place to prevent any misunderstandings or family issues as it ensures transparency and encourages open discussion.
Whether you have only owned your business a short time or have many years under your belt, it pays to have an 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 little to sell, then your options when selling a business may be limited to just closing or liquidating your business. When considering closing or selling a business it is important to get professional advice. For more information visit NZ Business for Sale Opportunities on nzbizbuysell
For more on Preparing your Business for Sale
Or here to Sell a Business
By Richard O'Brien - nzbizbuysell
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- Options when selling a business
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- Valuing a business for sale
- Difference between profit and value
- 5 Questions before you sell a business
- Selling a business and getting a good price
- Advertise to target your business buyer
- Why have a business exit strategy?
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- Get more when listing your business for sale
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