As we well know, timing is everything in business. Exactly when to place your business on the market should be of your choice, not a decision forced on you by adverse circumstances.
In an ideal world, the best time to sell your business is when:
- The market is HOT for your category of business. You can determine this by talking to us at Verified because we sell a broad range of businesses not just on the Sunshine Coast, but all over Queensland. The market for different categories of business changes. A few years ago we couldn’t get enough hairdressers, but now in 2015, we battle to sell them.
- You have solid financials showing at least three years growth in both Turnover and Net Profit. Buyers like to see a business that is performing well in the market. If the figures are showing a fall in Turnover and Net Profit, it immediately raises concerns and will devalue your business. Buyers are sceptical at the best of times and buyers’ accountants get very negative if a business has a declining turnover.
- You have full accountant’s financials with Profit & Loss, Balance Sheet, plus BAS (for at least the previous five quarters). When you accept a contract on your business, you will be subjected to a rigorous Due Diligence process by the buyer’s accountant who will, as well as the above, ask for all relevant financial details which may include tax returns, bank statements, invoices, receipts, aged debtors and creditors, and anything else they deem necessary. Ensure that all your financials are “squeaky clean” with no holes or queries that may arise or raise suspicion. If your business has a ‘cash’ component in the turnover and some of that cash doesn’t appear in the financials (i.e. the cash finds another home in your back pocket!), don’t expect to get a premium price for your business. You can’t have your cake and eat it too! If you want the best possible price for your business, start putting all the cash through your books well before you decide to sell. If your turnover suddenly improves for no explainable reason, questions will be raised and the ATO might get suspicious.