Ask the Experts

PwC Partner John Dobson – January 2016

Over the Christmas break I’ve been thinking about my future and that of my business and how I might go about selling or transitioning it to family members. What’s the best plan for this and what do I need to consider?

Some business owners believe that selling up is just as easy as selling your home. In reality it is not as simple as erecting a “for sale” sign and banking the cheque.

There are, however, some similarities to home sales in that a well-presented business will fetch a higher price than one that is not well prepared. Preparing a properly structured transition plan well before your planned exit will reap benefits.

In fact, those who run their business as if it is always for sale will most likely achieve the best value on sale.

This involves focusing on the factors that drive value in your business. Although many may seem quite straightforward, it is amazing just how many businesses do not achieve the maximum sale price because the basics have not been attended to.

All business owners should ask themselves these difficult questions:

  • How dependent is your business on key people?
  • Do you have a business plan that demonstrates the upside to a purchaser?
  • Do your management reports provide adequate information for a prospective purchaser?
  • Are your financials prepared or audited by a reputable firm of chartered accountants?
  • Are you extracting maximum returns from your existing operation?
  • Do you have strategies or procedures in place to mitigate all material risks?
  • Do you have well-documented prospective financial information?
  • Are key supplier and customer relationships adequately documented?
  • Have you considered who the ideal buyer may be?
  • Are your systems well documented and is your intellectual property protected?

It is never too early to plan for a business transition and you should always manage your business as if it is for sale, as well as understand the factors that drive value from a buyer’s perspective.

As published by Fairfax in January 2016.

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