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Simple Tips To Successfully Sell Your Family Business
Successful family owned medium sized businesses are often a labour of love, built up over many years of blood, sweat and tears. However selling a business is foreign to most owners, and so it makes sense to do some homework and be well prepared. We provide some tips to help you to maximise the value of all your hard work.
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Earnouts Explained: A Tool To Maximising Your Business Sale Price
WHAT IS AN EARNOUT? An earnout is essentially a portion of the business sale price which is contingent (and deferred) on the business achieving certain milestones during a specified time period, after settlement. The portion of the sale price retained by the earnout may be as low as 10% or as high at 35%. It is important to note that ...
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The Importance of Being Sale Ready
Do you own a business but haven't given much thought to selling? Well brace yourself! Your business should always be managed if hypothetically, it was going to be sold tomorrow. It is unfortunate but in today's environment you never know what's around the corner. Too often I meet with business owners who are not ready to sell but due to ...
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State of the Market
So far this year we have found the main issue with matching buyers and sellers has been the matching of their expectations. It seems that, even with so much press about the Global Financial Crisis ("GFC"), sellers continue to have unreasonable sale price expectations on their business. Vendors have worked very hard building their business to their current condition. They ...
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Purchase Price Allocation
In most sale transactions there is plenty of debate surrounding the treatment and allocation of the purchase price. Generally (or should I say always) the vendor will aim to minimise the amount of the sale price allocated to stock, plant and equipment or other physical assets and maximise the allocation of goodwill. Conversely, the purchaser will want to maximise the ...
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Making an Offer/Contract Terms
Buying a business through a business broker is a very exciting experience. Once you decide you want to make an offer for a business, you need to understand the process involved. After you make an offer through your business broker, the next step is becoming familiar with the contract for sale of a business and completion of same. Any business sold ...
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Lease Obligations After Your Business is Sold
Many businesses operate from leased commercial premises. However what are the obligations to the lessee (you) if your business is sold? Once your business is sold the lease does not automatically transfer to the buyer upon sale of the business. You will still be liable for the performance of the lease unless the lease can be assigned (that is, lease ...
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Share Sale vs Asset Sale
When buying an existing business you may have the option of either purchasing the shares of the business or the assets of the business. If you purchase the shares of the business, you inherit the debts and liabilities of the business at that time. You also have an exposure to any debts and liabilities which may arise in the future ...
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Return on Investment
Most small to medium businesses are sold using the capitalisation of earnings multiple. This means purchases are prepared to pay a multiple of the business earnings. When calculating the earnings of a business, it is necessary to remove any expenditure by the proprietor of the business. To do this, earnings are calculated as Earnings Before Interest, Tax and Proprietor’s Income ...
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What Influences the Market Price of a Business?
Profit is generally the main direct impact on market value of any business. However, some non-financial factors play an import role in both the sale price of the business and also the attractiveness of the business to a potential buyer. Such factors may include: Great businesses have a history of profit growth, year in year out Strong growth prospects which are clearly ...
