Selling your business can be a complex and time-consuming process. At ASAP Lawyers, we can help advise you on whether selling your business is the right option for you. If it is, we can assist in the sale process from the first steps through to the day of settlement.
To begin, you will need to establish the value of your business. You may wish to receive assistance from your accountant or similar trusted financial adviser. In doing so, they will choose the most appropriate method to value your business. Here are a few examples of how your business could be valued:
- Asset valuation method: calculate the total value of all assets of the business. This includes assets such as stock, equipment, cash etc. This total figure can then be used as an indication of the worth of your business.
- Future profits: a business will be of more value to a purchaser if you can show that it is likely to be profitable in the future. To do so, you can look to your current business trends and profits and compare these figures overtime to give an estimate as to the future potential earnings of the business.
- Comparable sales: you can look to similar sales of business of similar size and success to get a realistic price range for your business.
If your sale is the sale of a small business, being a sale under the total sale price (including all goodwill, plant, equipment and fittings) comes to $450,000, the process begins with the preparation of a Section 52 Statement. This Statement is handed to the Purchaser before they sign a contract or pay a deposit. The Statement is in a prescribed form that sets out various information about the financial performance of the business. Typically, your accountant will prepare this Statement.
If it is not provided or it is defective, a purchaser may withdraw from the contract at any time up until possession is taken or a time 3 months from when it is provided, whichever is the first to occur. If the sale price were to be reduced below that and a Section 52 Statement was not provided, the contract would be voidable at the option of the purchaser.
If your business is valued at more than $450,000, a Section 52 Statement is not required. However, it is still recommended that you as the Vendor obtain all information surrounding the businesses finances, assets and liabilities in order to provide a prospective purchaser the information they may require prior to committing to a purchase.
ASAP Lawyers regularly accepts instructions from vendors and purchasers of businesses. We can assist from preparing and reviewing contracts of sale, leases and other related commercial documents associated with a sale of business. Contact us for a consultation.