Your Guide to Businesses for Sale In Australia
Selling Businesses in Australia
Buying a business might be a way to jumpstart entrepreneurship without doing a rough and tedious initial work. However, you have to go through some processes on your way to purchasing the business. Here we provide your guide to businesses for sale in Australia.
1. Decide the Type of Company You Want to Buy
You should have a list of potential businesses to acquire, and then list out criteria with which you will eliminate them. Seek independent advice from others, to know what they think about your company’s choice to purchase.
2. Get to Know the Reason Why the Business Is for Sale
There are several reasons for which a person will choose to sell their business to you. For one, the payoff from selling a business is huge; it can be several multiples of a company’s revenue, depending on how promising the company may be. Thus the person selling the business may be looking to get a huge one-time reward for all the labour committed to building the business over time.
Another reason might be that the entrepreneur may desire to retire from active business and does not want to close down the business, especially if it is a promising one. Those are the positive factors. However, there might be negative ones.
The business may be facing serious underlying issues that the owner may be running away from. The business may be threatened by the influx of an alternative or a competitor; it might be making serious losses. It may be facing huge debt or even bankruptcy. Get to know the reason and if you are comfortable with it.
3. Carry Out Your Valuation
You can approach the business to get to know their financials; however, we recommend ensuring that independent auditors check the financials. You can then use these figures to construct financial analysis, modelling and valuation for the business. If you are not so skilled in this, you can get professional financial analysts to do this for you.
However, you mustn’t merely rely on the figures to arrive at a value for the business. Pay attention to other non-financial metrics like location, business prospects and others.
4. Seek Expert Advice
No matter your business expertise, you will still gain a lot by consulting experienced persons for expert advice on different issues and topics relating to your company’s purchase.
5. Negotiation and Agreement
After going through the above processes and deciding to buy the company, you can now approach the owners for a potential sale. The approach may be informal at first, especially if you have not spoken about your interest to buy in the first place.
Then you can now send and allow an acquisition contract. We very much recommend that you get a lawyer to get this prepared for you. Usually, you are the one to send this along to the selling party. The other party then reviews the terms of the contract to see if they are comfortable with it.
If there are terms that are not quite right with either or both parties, there can now be a negotiation process. This does not have to be overly formal. However, ensure you let your legal counsel know about it. After the negotiations and final agreements, the contract may then be signed by both parties.