Selling a business is a process that begins well before the first potential buyer conversation, and the preparation done in advance, clean financials, reduced owner dependence, resolved legal issues, typically determines the eventual sale price more than negotiation skill during the sale itself.
Work through these before listing the business for sale.
Get the financials genuinely clean
Buyers and their advisers scrutinise financial statements closely, and any inconsistency, informal record-keeping, or personal expenses run through the business raises questions that reduce trust and, ultimately, price.
Several years of clean, professionally prepared financial statements give a buyer confidence in the business’s actual performance, which is worth the effort of getting this in order well before a sale is imminent.
Reduce owner dependence before selling
A business that only runs because of the current owner’s personal relationships and daily involvement is harder to sell and typically sells for less, since a buyer is effectively assessing what they get once that dependence disappears.
Document systems and processes, and where possible build a management layer that can operate without the owner’s constant involvement, well before actively marketing the business for sale.
Resolve legal and compliance issues in advance
Outstanding disputes, unclear intellectual property ownership, or compliance gaps discovered during a buyer’s due diligence process can derail a sale or significantly reduce the price at the last stage of a deal.
Confirm the company’s registration and compliance standing is fully in order with the Companies and Intellectual Property Commission well before listing, rather than discovering a problem mid-negotiation.
Structure the sale and get proper advice
Whether the sale is structured as the company itself or only its assets carries significant tax and liability implications, and this should be decided with a qualified accountant or attorney rather than assumed.
A business broker or advisor experienced in business sales can help value the business realistically and manage the process professionally, which is generally worth the fee relative to the risk of managing a sale without that experience.
Frequently asked questions
What determines the eventual sale price the most?
Preparation done well in advance, clean financials, reduced owner dependence and resolved legal issues, more than negotiation during the sale.
Why do buyers scrutinise financial statements so closely?
Any inconsistency or informal record-keeping raises questions that reduce trust and, ultimately, the price a buyer is willing to pay.
Does owner dependence affect the sale?
Yes. A business that only runs because of the owner’s personal involvement is harder to sell and typically sells for less.
When should legal and compliance issues be resolved?
Well before listing, since problems discovered during a buyer’s due diligence can derail a sale or reduce the price late in negotiations.
Should a business owner use a broker to sell?
Often worth it. A broker experienced in business sales can value the business realistically and manage the process professionally.
