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10 tips for preparing to sell your business

See all articlesLooking at data on computer preparing business to sell
Selling a business
Lucas Couper
Lucas Couper
Managing Director
September 7, 2018
minute read

How to get your business sale-ready

It takes longer to sell a business than it would a car or house, and needs planning with the right team. So, advance preparation is critical - to truly achieve the best result, we recommend allowing 18 months to ensure everything in order.

In a typical sales cycle, we find that in 100 potential buyers:

  • 20 per cent are interested to learn more
  • 5-10 per cent will make a bid
  • Of those that bid, only 3-5 per cent are serious enough to go ahead with a purchase.

As such, proper planning and preparation will mean a better outcome for your sale, and a buyer who knows everything about the new business they have just purchased. Here we cover the top ten items to consider for the sale of a business.

Nash Advisory team reviewing business sale documents

1. Engage the right management team

It’s highly stressful to continue managing your business while preparing for and negotiating its purchase. If your organisational structure doesn’t employ a Chief Executive Officer or General Manager, we suggest recruiting to assist you with your sale preparation and maintaining business as usual.

You can increase the value of your business by having either a CEO or GM in place who can manage the business without input for a time.

2. Focus on growth

Your business performance should continue to aim for growth even though you are planning to sell. A business that is doing well is hugely appealing to buyers and investors.

Any decline in business performance before or during the sale period will not help to lure buyers or facilitate getting the best sale price.

3. Improve your brand

The business buyer is purchasing your customers and reputation as well. If your brand needs a refresh, consider this as a priority to get the business sale-ready and entice potential buyers.

Put some time into ranking well on Google searches, and have a strong social media presence. What makes your business and brand unique? If you haven’t been promoting this, pre-sale is the time to create a solid communications strategy and campaign.

4. Be prepared

Purchasing a business is a big decision as you will know from your own experience. The biggest misconception is that the process will be fast and that the company will be in demand. A sale process could take at least six months to get the outcome you want.

Some of the critical factors for your business valuation are the size of the business, profitability, customer spread, uniqueness of the product or service, regulatory environment, and the reliance on the owner.

5. Talk to your accountant and think about tax planning

Speak to your accountant early on and plan for your personal financial future post business ownership. This will help you be clear on your personal and corporate tax obligations (e.g. capital gains).

Knowing your requirements and options can also help you understand business and sale structure opportunities.

6. Find a lawyer with experience in mergers and acquisitions

You will require a Business Sale Contract or Business Agreement which will need to be drafted and reviewed by a specialist lawyer. They will cross-check the payment terms, sale conditions, intellectual property transfer and include dispute resolution clauses.

Business sales, acquisitions and mergers can be complicated, and it’s best to have trusted legal representation on your side.

7. Data is vital. Start compiling it for all aspects of your business.

Selling a business relies on vast amounts of data and records for tax, cash flow and finances. While the owner knows the ins and outs of their business, a new buyer will want to see accurate records and historical data.

Consider highlighting industry trends and any seasonal fluctuations buyers need to be aware of. Be prepared to articulate these. The more transparent and organised you are with information, the more attractive this is to a potential buyer.

8. Review all of your contracts, including staff contracts.

Consider this part of your exit strategy stock take as you would intellectual and physical property that is included in the sale. You will need to ensure contracts are current and manage policy and contract renewals that are due during the sale period. Maintaining current records and contracts holds you in better stead for securing a workable sale offer.

9. Include your management team in the sale process.

To avoid anxiety in the company, you will want to keep the sale plans under wraps to your general staff in this initial phase. Your trusted managers, however, should be involved in all parts of the sales preparation and purchase process.

10. Finally, engage a business adviser.

Selling with an adviser is your best chance for a successful sale. Having the right representation and advice means you can spend time maintaining the business function. An adviser, such as Nash Advisory, offers value to sellers in that they are not emotionally tied to the sale process and will avoid the common pitfalls of negotiations and settlement.

We will help you understand the current market and have a vast network of vetted potential buyers, both local to Australia and overseas. Business advisers manage all stakeholders and transactions while ensuring due diligence, right through to settlement.

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