Sell your business

Learn what steps you need to take if you're about selling your business and the tasks you may have to undertake. Follow the proposed steps to guide you through the process to help you get it right.

• 1. Make sure selling is the right decision
• 2. Decide whether to use professionals
• 3. Decide what’s for sale
• 4. Value your business
• 5. Find buyers for your business
• 6. Negotiate the sale
• 7. Prepare the contract
• 8. Take care of your employees
• 9. Finalise your tax and legal issues
• 10. Transfer your business to the new owner

1. Make sure selling is the right decision

Consider the real reason behind your decision to sell your business, and make sure it's the right one for you. This is a common question that potential buyers will ask, ‘Why are you selling your business?’.

If you're thinking of selling because of financial problems, consider about getting professional advice from a business adviser to make sure selling is the right decision. Selling your business may result in additional obligations to pay, such as employee entitlements or tax amounts from asset sales.

2. Decide whether to use professionals

Look at using a reputable business broker, accountant or solicitor to help you sell your business.

Business brokers are professionals who help you buy or sell businesses. They can help you understand legal and government requirements, offer advice about the profitability of your business and provide market trends for your industry. They can make the process of selling your business less stressful.

Make sure you check the professional's credentials to ensure they're reputable before using their services.

You may also wish to talk to family members and friends for more personal advice on your decision.

3. Decide what’s for sale

Make sure you agree on exactly what to include in the sale of your business. Establishing what exactly is for sale will help you value your business. Ask yourself:

• Do you want to sell the business outright including all the assets?
• Which assets don't you want to sell?
• Do you want to sell your registered business name?
• Are you looking to sell the business’ intellectual property (IP)?
• Do you want to include any property the business might own?

4. Value your business

Valuing your business is about working out how much your business is worth so you can set the right price when selling.

There are different ways to value your business. Three of the most common valuation methods are:

1. Analysing your market – compare your business to similar businesses on the market or that have recently been sold. While this is not a formal valuation, it does provide a guide to your possible market price.
2. Calculating a business’s net worth – compare the difference between what your business owns (assets) and what your business owes (liabilities). You need to consider both tangible assets (such as machinery, buildings and land) and intangible assets (such as goodwill, brand recognition and intellectual property).
3. Using return of investment (ROI) – use your business’ net profit to work out the value of your business.

5. Find buyers for your business

You can advertise the sale of your business to potential buyers through different methods, which include:

• business brokers or real estate agents
• digital and traditional media
• your existing networks (e.g. family, friends, or employees)
• word of mouth
• current or former customers of your business

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

Check whether there are any requirements in your state or territory about what information you need to give potential buyers.

6. Negotiate the sale

When negotiating the sale, make sure the information you give about your business is accurate and true. If you say anything or provide information that is later found to be untrue, it may be considered misleading or deceptive behaviour.

You need to agree with the buyer on a range of things, including:

• sale price
• deposit amount (usually 10% of the sale price)
• settlement period
• handover training (if any) for the buyer
• arrangements for existing staff

7. Prepare the contract

Often, an intermediary will draw up the sale contract for you.

Check your state or territory to find out if there are any special requirements you need to follow when preparing your contract.

You can also have a solicitor check the contract for you. The solicitor can confirm that the contract doesn’t include any false statements, and covers all aspects of the sale, including:

• all the relevant assets that are being transferred, including property, equipment, fixtures, fittings, stock, and any rights to use any names
• all the relevant liabilities, including creditors (people or businesses that your business owes money to) and the lease of the business premises
• responsibility for employees and employee entitlements, including whether employees are to be transferred with the sale
• statements about what will happen if any issues arise (for example, the buyer decides not to proceed, mistakes are discovered in the contract, etc)

There are some contract clauses that will restrict you from trading in your profession after the sale of your business. These clauses are often to prevent you from competing directly against your sold business. Make sure you’re aware of all the terms and conditions of the contract before deciding to sell.