Information On Selling

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Selling A Business

Should You Consider Selling?

The decision to sell a business is often a difficult one because of the profound personal and financial impact. There are many influences which bring business owners to this decision, including:

• The business has grown too large for the founder to comfortably manage.
• The owner has built his retirement investments from the business’s profits and now wishes to exit the business and enjoy his twilight years.
• The owner has no family succession plans as an exit strategy.
• Worrisome exposure to competition often aggravated by personal guarantee on expensive short term loans.
• Possible failure of the business if one or more partners become seriously ill or disabled.
• The business has become too technically demanding considering the owners present qualifications.
• Divorce or dissolution of partnership.
• Owner’s desire to pursue other business interests which may be more challenging or less stressful.
• Lack of sufficient long term working capital.
• A need within the company for new skills, new resources, or a new philosophy to cope with ever changing economic forces, government regulations, and competition.

The above are valid reasons for considering a sale, do not imply failure or willingness by the owner to accept less than a fair price for the business.

How Much Is A Business Worth

A business enterprise, like any asset, is worth what a buyer is willing to pay.

Buyers ask countless questions, but they are primarily concerned with a fair return on their total investment. A typical return on the total investment in a good small business is 20-30% on the total investment after allowing for a reasonable wage to the owner/operator. Prospective buyers must also make judgments about market position, proprietary know-how, competitive strengths, quality of the assets, growth potential, and risks of the business.

To accurately determine the true worth of a business, the company’s accounting reports, usually prepared for tax purposes, must be restated to reflect the true financial performance of the business. Tax lodgements are aimed at legally minimising the profit of a business and while this is a legitimate aim it often does not provide a buyer with an accurate picture of the benefits emanating from the business.

Seachange Businesses help the business owner determine the true value of the business and, most importantly, can help prospective buyers understand the reasons for such value, which allows a transaction to be structured for the maximum benefit of buyer and seller.

Seachange Business Broker’s Privacy Policy, Is Confidentiality Important?

Sound working relations with employees, customers, suppliers, and bankers are important factors to a company. Any premature indication of a possible change in ownership could disrupt these relations and weaken the company’s competitive position. For these reasons, and many others, confidentiality is critically important at all stages. With the proper procedures, it is possible to minimize the risk of an untimely disclosure.

In every transaction, there is an appropriate time to reveal that a sale may be imminent. Proper timing of these sensitive announcements can contribute to a smooth transaction and reinforce the buyer’s willingness to proceed to a closing.

Seachange Business Brokers makes sure that such information is kept confidential throughout the entire selling process until it is appropriate to reveal that a sale is forthcoming.

When Is The Best Time to Sell?

Usually the best time to obtain the highest price occurs when sales and earnings are good and trending upward. A solid earnings trend will enable a buyer to pay a higher price and still meet his return of investment criteria. A history of good performance also gives the buyer confidence in projected future earnings.

However; the economic cycle also influences the demand for regional businesses. Today’s regional market is strengthening. Capital City housing prices are recovering, but increasing retrenchments, urban commuting pressures and worsening pollution reinforce city dwellers’ desire for a sea change and more control of their own destiny.

The desire for a more relaxed lifestyle and a good income is bringing numbers of cashed up potential business buyers to the sub-tropical north eastern coastal towns of Australia.

Who Would Buy It?

For most companies, there are several categories of prospective buyers. The most obvious are other companies in the same business for whom the acquisition would be a logical expansion with potential economies of scale. Consideration should also be given to suppliers and customers of the business.

In our experience, approximately 80% of the prospective buyers are individuals who want to control their own future. Many of them will be seeking a sea change and moving into our beautiful sub-tropical region from Capital Cities and other States.

However, there is an increasing number of overseas business people, especially Chinese, who wish to take advantage of recent changes to Australia’s Business Skills Visa Program and obtaining residence for themselves and their families by managing and owning or part owning a significant Australian business.

How Can Seachange Business Brokers Help?

Seachange Business Brokers can help by using their experience and know-how gained from several thousand business sales. We guide the client through all of the complex steps required to sell a business. The first step will be our review of the company’s history and the client’s objectives to make sure that a sale is the best course of action. This review includes an opinion of a range of selling prices of the business in today’s market.

If the client decides to proceed with the sale of the business, Seachange Business Brokers then prepares custom-tailored presentation documents, develops buyer prospect lists from its contact files and other resources, makes the proper approaches, screens the buyer prospects, and introduces only serious, qualified buyers to the client.

Seachange Business Brokers will handle the entire transaction from the initial introduction of the buyer through closing, including coordination with lawyers, accountants, landlords, leasing and utility companies, and title companies.

An owner may ask: “Why can’t I sell it myself?” There are several reasons why most owners choose not to:

• An owner representing himself cannot maintain anonymity and the lost confidentiality could seriously hurt the business.
• An owner may not be knowledgeable in current areas of law, accounting, taxes, and marketing of businesses.
• An owner typically does not have the ability or time to contact, screen and qualify a large group of prospects to find a qualified buyer who is serious and will offer a fair price.
• An owner’s talents are much more effectively utilized in running the business than in trying to sell the company.
• An owner generally would not have the experience, knowledge, and negotiating skills needed to sell his company efficiently and for the best price, particularly in a highly emotional negotiation such as the sale of a business where the buyer’s objectives are totally opposite of the owner’s.

Seachange Business Brokers has a trained professional staff knowledgeable and skilled in business transfers and they can make the sale of the business a reasonably pleasant experience. Call us to find out how we can help.

Why Use Seachange Business Brokers?

Vendors select Seachange Business Brokers to assist them in the sale or purchase of their business for the same reasons: Expertise and Proven Results!

Who are we?

• A leader in the field of bridging finance.
• One of Australia’s most experienced and qualified business broker when it comes to preparing company financials.
• A respected company who has been successfully satisfying the needs of our clients in financing and restructuring their businesses for over three decades.
• A full service broker who provides all of the services required from the initial appraisal to the final closing.

Seachange Business Brokers is a multifaceted firm, specialising in the following:

• Small-to-Midsize Business Sales
• Business Valuations
• Buyer Representation and Acquisition Searches
• Due diligence investigations. We are auditors and licensed Private Investigators.
• • SBB professionals have many years of experience in operating, appraising and selling businesses. The following are some of the organizations in which SBB professionals are qualified members and actively support:
  • AIBB – The Australian Institute of Business Brokers
  • Australian Taxation Institute

Who Are The Buyers For Privately Held Companies And What Is their Acquisition Criteria?