Lloyds Expert Tips on Selling Businesses

Article Author: Garry Stephensen
Position: Managing Director
Read time: 5 mins

Q1. Is there a right time to sell?

It is best to sell before everything has gone "pear shaped". While sales and margins are increasing, and there is still blue sky for the buyer. It is tempting to hold on in the hope the price will be higher later. But the people who sold before the recent sub-prime crisis may well prove to have been smarter than those who stayed on, as the business cycle now suddenly appears headed for a downturn.

It pays to plan ahead and prepare your business for sale. Timing is crucial when selling a business, and several factors can indicate the right time to sell:

Local Market Conditions
A strong economy, high demand in your industry, and favorable market trends can lead to higher valuations. When buyers are confident and capital is accessible, it's often an opportune moment.
Your Business' Recent Performance
If your business is performing well, with consistent revenue growth, profitability and a healthy cash flow - then it's more attractive to buyers. Selling during a peak performance period can maximize your valuation.
Industry Trends
If your industry is on an upswing, with growing demand and positive future outlooks, it might be a good time to sell. Conversely, if you foresee industry challenges or disruption, selling before those hit could be wise.
Your Personal Circumstances
Personal readiness is also key. Whether it's for retirement, a career change, or simply feeling the time is right, your motivations and readiness should align with market opportunities.
Tax and Regulatory Environment
Changes in tax laws or regulations can impact the proceeds from a sale. Keeping an eye on upcoming changes and planning around them can be advantageous.
Your Succession Plans
If you have a succession plan in place or a strong management team that can carry on post-sale, it can make the business more attractive and ease the transition for the buyer. In essence the right time to sell is when your business is in a strong position, market conditions are favorable and you are personally and strategically ready to exit.

Maximum Value, Fast!
We specialise in achieving the maximum sale price for your business with the best possible deal structure for you and within a fast timeframe.

Real Business Experience
Lloyds have over 40 Years of industry experience with a team of passionate and qualified business brokers, specialising in mid-market business sales of $1 million to $100 million.

Free Business Appraisal
A qualified business broker will provide you with an obligation free, pre-sale appraisal of your business, so you know what approx timeframe and price to expect before proceeding.

Access To Buyers
Lloyds has an Australian and International reach, with a database of over 50,000 prospective buyers and equity firms ready to start marketing your business to.

Confidentiality Guaranteed
With discrete marketing techniques your confidentiality before, during and after the sale process is guaranteed.

Step-By-Step Guidance
We step you through the process finding the right buyer, preparing to achieve maximum sale value and closing the sale.

Q2. What should people consider when preparing their business for sale?

The most important thing when preparing for a sale is to make yourself redundant. It is very hard to sell a business that is totally dependent on you working a 60 hour week. Who wants to pay good money for a life like that?

In particular, start banking all the money, even if it means paying tax, and write up your closing stock and work-in-progress to full value.

Next is the question of perceived risk for the buyer. The lower the risk, the higher the price. So the more you can do to instill confidence in the buyer, the better. You can do this by documenting your business processes before selling. Document your sales, your supply agreements with suppliers and customers, your procedures etc. If you have a lease in place, ensure you understand how the lease will impact the sale of the business. The condition and integrity of your stock may have an impact on the valuation.

Business Brokers Melbourne

Q3. What are some options for selling your business?

Close shop and auction the equipment
Talk to your customers, suppliers and competitors
Advertise it for sale yourself in the local newspaper
Ask your Accountant to sell it for you
List it for sale with a local Agent
"Target Marketing" through a reputable Broker.
A WIWO (Walk In Walk Out) business sale, which has its own unique legal considerations.

Q4. How do you find the right buyers?

A hairdressing salon has no value to a butcher. If you offered it to him for free, he still wouldn't want it. So you need to search for motivated buyers who think they can add value to the business. They will see less risk in it, and be prepared to pay more.

You can do this through "Target Marketing", where you concentrate your marketing activity on searching for qualified buyers with a strategic interest in buying your business, rather than relying on luck, or paying a fortune to advertise to people who are never going to be buyers.

Q5. What are some tips to maximise the sale price for your business?

As with any form of selling, you need to focus on what the buyer is looking for, understand his motivation and highlight the factors which are important to him. Is he after your location, your customer base, your product range, your distribution network, your name and reputation? Does he just want you out of his market?

The ultimate limit to the price you can get for your business is the price at which the buyer decides it would be cheaper to start up a new business in competition than to buy your business. If you know why he wants to buy your business, and what he hopes to achieve with it, you can make an estimate of this cost and work out how far you can push him.

How to value a business for sale

Q6. What are the alternatives to selling your business?

Once you have decided you want to free up your time and/or capital from the business, selling all or part of it is your only option. You could retire and appoint a manager, but that would still require oversight, and leaving your capital at risk.

Selling all or part of the business to offspring, Management, or the public (through an IPO), are also options.

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