Selling your business requires the same meticulous preparation as making a house sale-ready. This guide outlines essential steps for vendors to enhance their business’s appeal, ensuring a seamless and cost-effective sales process.

 

Due Diligence and Confidentiality

 

Legal Safeguards:

– Utilize standard Auckland District Law Society agreements.

– Provide due diligence materials for a thorough business assessment.

 

Confidentiality Agreement:

– If including sensitive information, mandate a confidentiality or non-disclosure agreement.

– Ensure inclusion as a term in the sale and purchase agreement.

 

Financial Transparency

 

Record Presentation:

– Furnish the last three years’ financial statements.

– Include monthly management reports and GST returns for a comprehensive financial overview.

 

Realistic Valuation:

– Realistically price the business based on recent performance.

– Seek a second opinion if there’s a significant variance between broker valuation and accountant assessment.

 

PPSR Clearance

 

Asset Security:

– Conduct a Personal Property Securities Register (PPSR) search.

– Clear redundant financing statements for assets with repaid loans.

– Coordinate with secured parties to release remaining security interests.

 

Stock Management

 

Optimization:

– Discard obsolete items or those irrelevant to future business operations.

– Maintain up-to-date stock records for a smooth joint stocktake before settlement.

 

Asset List Precision

 

Clarity and Accuracy:

– Ensure the asset list is current and clearly described.

– Exclude leased items provided under the lease agreement.

 

Supply Contracts Examination

 

Critical Contracts:

– Include a list and copies of all essential supply contracts.

– Highlight assignable contracts or prepare for negotiations with the other party.

 

Employee Transition

 

Seamless Handover:

– Anticipate termination of employment on settlement.

– Coordinate new job offers from the purchaser with business sale announcements.

– Be cautious about disclosing employee records; prioritize privacy and legal compliance.

 

Lease Matters

 

Document Clarity:

– Include all lease documents in the due diligence bundle.

– Ensure completeness and consider legal review for verification.

 

Lease Assignment:

– Prepare for lease assignment to the purchaser on settlement.

– Negotiate a new lease if required, especially for expired or month-to-month leases.

 

Seller’s Mindset

 

Emotional Preparedness:

– Acknowledge potential emotional attachment during the sale process.

– Understand that the purchaser may have a different perspective on the business’s value.

– Approach the sale with objectivity and respect for the purchaser’s right to run the business post-sale.

 

Maintain a strategic and composed approach to selling your business, considering every aspect from financial transparency to employee transition. This guide ensures that you present a compelling and attractive business proposition for prospective purchasers in 2024.