A great read from local business- Janine Roberts, Accounting Associate at Haven on “Top tips for selling your business”.
Selling a business can be a complicated and stressful process if you don’t have everything in order. When you’re moving on to your next adventure, keep these great tips in mind to make the sale go as smoothly as possible for everyone involved.
Make a succession plan: Even if you’re not yet ready to sell, having a succession plan in place is a good idea and will make life a lot easier when the time comes to part ways with your enterprise. As well as detailing any HR plans such as training and job descriptions, a succession plan should also include the important organisational processes and instructions for managing any financial, legal or tax issues. A succession plan puts a buyer’s mind at ease as it demonstrates that you’ve prepared your business well for the transition and have given thought to its continuing success. You should review your succession plan once every year to make sure that the details are as up to date as possible.
Have a business valuation: Knowing what your business is currently worth is invaluable when it comes to getting ready to sell it. If you sort out a valuation some time before you plan to sell, you’ll be able to see where you can make improvements to increase its value and maximise profits from the sale.
Sharing the details of the valuation with a potential buyer shows that you know what you’re worth and that you are trustworthy and transparent. You’ll also be saving them an expense that they won’t have to cover themselves.
Do your tax homework: It’s best to call in the professionals for this one as tax is treated differently depending on the type of business sale – there will be certain tax requirements for an asset sale or a share sale, and if either party gets it wrong, there will be implications. You’ll also need to consider your GST requirements and whether both the buyer and seller are GST registered.
Tidy up your financials: Having all of your financial paperwork in order is key to a successful business sale. No buyer will want to take up the helm if they need to sift through mountains of paperwork. You’ll need to have clear, consistent reports that show how your business has been tracking over the past 3-5 years.
Your potential buyer will need the last few yearly tax returns, balance sheets and profit and loss statements. Usually five years’ worth of historical financial information and up to two years’ of practical business forecasts should be provided.
The earlier you get in touch with a Haven professional accountant, the better. We can help you get all of your ducks in a row and guide you through the process of selling your business from the initial thought process to a successful sale. Check out our website www.haven.co.nz/accounting for more information or contact
As an Accounting Associate at Haven, Janine is accustomed to working alongside an extensive number of clients, understanding and delivering customised reports specific to their industries and requirements, as well as in ensuring their tax compliance requirements are met. With her strong reconciliation and analytical skills, Janine provides valuable support to businesses in managing and monitoring results against forecasts and budgets.