Suite 2/2 Otranto Ave, Caloundra QLD 4551

Business Sales & Purchases

Making the decision to sell or purchase a business can be a life changing and stressful event. We offer a range of services available to assist you in making this process less stressful.

We recommend that you use the services of qualified and experienced professionals who can provide you with advice in this specialised area. We work with reputable Business Brokers, Financial Advisors, Accountants, Financiers and Insurance Brokers who can assist you to navigate through this complicated process.

 

The following questions are the most commonly asked by our clients when considering purchasing their business premises.

The Seller will need to decide whether it is the business (business assets) that will be sold or the underlying structure that owns the business (usually a share sale where a company carries on the business).

In the sale of the business, the assets of the business such as plant and equipment, goodwill and intellectual property are sold, while the seller retains ownership of the business entity and company structure.  A business sale may carry less risk to the Buyer as they only purchasing the business assets and not the business legal entity which may have unknown liabilities (for example tax, creditors etc).

A share sale is where the buyer purchases all or part of the Seller’s shares in a business’s legal entity.  The benefit of purchasing shares is that the Buyer assumes full control of the business as certain licences may attach to that entity and the contracts with suppliers and customers remain the in place.  The main risk of share sales for buyers is the increased risk of inheriting liability of the business.  From the Seller’s perspective, there may be large tax incentives to opt for a share sale as opposed to a business sale.

The Business Brokers are professionals who specialise in buying and selling businesses and can make the process of selling your business less stressful. A good business broker can provide a valuable advice, identify the selling points of the business and pitfalls to look for.

The way you advertise will depend on your business type, industry and contacts.

You can advertise the sale of your business to potential buyers through a number of methods, including:

  • Business Brokers or Real Estate Agents
  • Advertising online
  • Your existing networks (e.g. family, friends, or employees)
  • Advertising in the newspaper
  • Advertising in trade publications or using your industry contacts
  • Word of mouth

There are different methods of calculating the value of the business depending on the industry.  This may include assessing the value of the asset, estimating future profits and working out how much the goodwill is worth or benchmarking against a similar business.

Your Business Broker, Business Advisor and Accountant can also assist you with an assessment of the value of the business.  We recommend that you start planning your business sale several years ahead to ensure you maximise the value of your business by having strong financials.

To get a better understanding of the value of the business, you can undertake your own research before you decide to sell or purchase the business, including identifying the customers, competitors and industry.  A good starting point is Australian Bureau of Statistics and the ATO’s Small Business Benchmarks which could assist with an understanding of the overall performance of the business.

There are different methods of calculating the value of the business depending on the industry.  This may include assessing the value of the asset, estimating future profits and working out how much the goodwill is worth or benchmarking against similar business.

Your Business Broker, Business Advisor and Accountant can also assist you with an assessment of the value of the business.  We recommend that you start planning your business sale several years ahead to ensure you maximise the value of your business by having strong financials.

To get a better understanding of the value of the business, you can undertake your own research before you decide to sell or purchase the business, including identifying the customers, competitors and industry.  A good starting point is Australian Bureau of Statistics and the ATO’s Small Business Benchmarks which could assist with an understanding of the overall performance of the business.

Goodwill is reputation, viability and potential of a business.  It is an asset that is hard to value as it is not tangible and does not have a determined market price and can include:

  • customer loyalty and relations
  • brand recognition
  • staff performance
  • customer lists
  • reputation of business
  • business operation procedures
  • return customers

There is a range of things to consider when negotiating the sale/purchase of the business, including:

  • Purchase price
  • Deposit
  • Transfer of Intellectual Property
  • Assignment (transfer) of the existing Lease or new Lease
  • Training (if any) prior to and post settlement
  • Arrangements for existing staff and employee entitlements
  • Assets that are being transferred, including property, equipment, fixtures, fittings, stock and any rights to use names
  • Liabilities, including creditors and the lease of the business premises
  • Restrictions on trading after the sale

The Buyer will need to take into account the costs of taking over the business, including purchase price, transfer duty, working capital and professional fees and discuss with their financier the loan and investment options.

With the sale of the business, employees of the business may either:

  • be transferred with the business to the new owner; or
  • be made redundant.

It is important for the Seller to communicate with their employees and advise them whether they will be transferring to the new owner or their employment would end, due to the sale of the business.  Care needs to be taken when discussing a sale with employees.  If key personnel leave, the sale of the business may fail or worse, if the sale does not proceed you may be left without experienced staff.

A Business Contact of Sale is a legally binding document outlining agreed terms and conditions of the sale/purchase of the business prepared by Business Brokers or us.