Planning a business exit: Seven tips for attracting the right buyer

Selling your business is a challenge in itself but making sure you sell to the right buyer, at the best price, is even more of a challenge. Here are our seven tips for ensuring you sell to the right people:

1. Search for a ‘strategic’ buyer who will pay more for your business simply because they stand to benefit more than most other buyers, because, for example, they are buying into complementary products and services.

2. Prepare a comprehensive Information Document that will attract and convince the right buyer.

3. Tax plan – every exit has several different elements of taxation; nearly always CGT, often stamp duty and sometimes other taxes as well. Inadequate planning in this area can cost you a large percentage of the sale price in taxation.

4. Ensure that due diligence and relevant documentation is complete, accurate, up-to-date and demonstrates a well-managed business. This will support your value proposition, not detract from it. Many transactions fall over at this point but this can actually be used to assist in improving the value of the business.

5. Planning to be in a position to create some competitive tension by attracting several of the right buyers is a good start, but the conduct of the negotiations and discussions leading to the actual sale are a very important aspect of the process.

6. The legal agreements need to be structured to protect you after the sale – particularly around the key issues of any warranties, assurances provided, and also any event or finance included as part of the sale terms.

7. Business owners should not try to sell without the best advice. Well represented businesses are generally taken far more seriously and are perceived to be far more valuable than those without representation. A corporate adviser who has a reputation for selling good-quality businesses automatically positions your business in that category.

Importantly, post-exit you also need assistance with asset protection, estate planning and ongoing investment planning. The change from business owner to self-funded retiree is substantial.

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