Selling a business is one of the most significant financial and emotional decisions any business owner can make. Whether you’ve built your company from the ground up or scaled an existing venture, the process of selling requires strategic planning, careful timing, and the right approach to maximise value.
Yet many business owners make avoidable mistakes, such as undervaluing their business, rushing negotiations, or failing to prepare for due diligence.
How can you ensure a smooth and profitable sale? From positioning your business to attract the right buyers to negotiating the best deal, here are our top tips to help you sell with confidence and success.
1. Plan early and be ‘sale ready'
Successful divestments are strategically planned years in advance. This enables time to review the business and adequately prepare for the divestment.
Be clear on the existing business position, the drivers to maximise business value and derisk the business and the transaction. This will aid in the development of a sale action plan.
Actions to consider:
- understand the sale process and consider the transaction from the buyer’s perspective
- understand the value of the business and how to maximise it
- select a team of trusted advisers; create a sale strategy
- measure and grow business EBIT and build the revenue pipeline
- review the pre divestment structure and consider tax implications
- ensure legal matters and key contracts are in order
- check that financials are accurate and audits are unqualified and in order
- streamline and document processes and systems
- develop a key personnel management strategy
- consider the divestment timeline
2. Understand the sale transaction
There are several ways to sell a business, so it’s critical to know what you’re selling, how your business will be valued and the preferred structure to sell.
For example, an asset sale may occur when a business is sold, in which case the owner sells the company’s assets and goodwill. Another option for owners is to sell the corporate structure by selling the company’s shares. The tax treatment of each option varies.
Usually, business owners would prefer to sell their shares in the trading company as this provides access to tax concessions and often creates a preferred tax position. On the other hand, purchasers may prefer buying the business itself. This enables the buyer to establish a new company and pick and choose the assets and liabilities of the business. It also limits being exposed and held accountable for past trading activities.
Business owners should seek advice to understand the optimal sale structure, from their and from the point of view of the buyer.
3. When should you sell your business?
To optimise the value of their company’s sale, business owners should consider the timing of the divestment. When doing this, take into account the competitive market position, competitors (who can also be buyers), and the macroenvironment. This approach can be led by corporate advisers.
Consider the projected growth rate of the business and industry. Is the business growing? Or is the industry consolidating? What is the business market share?
Equally, consider the business owner’s personal circumstances. They may be nearing retirement or running a family business that may be best suited to divestment.
The long-term success of a business, and the preservation of the wealth imbedded within those businesses should be protected with an early and continued focus on strategic business succession and divestment planning.
4. Build your divestment team
Consider who will be on the divestment team to assist with preparing the business for sale, the transaction event, and the post-sale service period.
The advisers may include:
- Corporate advisers to structure and lead the sale process to fulfill the business owner’s objectives and maximise the sale proceeds.
- A trusted accountant, to ensure the financials and tax compliance are ready for the buyer’s due diligence, pre divestment structuring review, commercial matters, valuation advice and pre and post divestments tax planning.
- A legal team to advise on the appropriate deal structure, facilitate the due diligence, prepare and negotiate transaction documents and attend to regulatory issues.
Additionally, consider how to retain and reward the key staff involved in the business and who will play a significant role in the divestment. Consider employee share plans, employee share option plans, and transaction incentives.
5. Consider your lifestyle after the sale of the business
Selling a business is a major achievement. Business owners are typically extremely driven and focused on building their business. It can be difficult to transition from being a business owner to a retiree, employee, or full-time investor after a divestment event.
As a result, after divesting, think carefully about your lifestyle and sense of purpose. This may involve prioritising other things like health and well-being, spending time with loved ones, managing money, setting up a private auxiliary fund, launching a new business venture or all of the above.
