Key items when preparing your business for sale

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When preparing your business for sale it is important to identify the parts of your business that you have control over and which can have an impact on the value of your business.

At Tabak we have a detailed checklist that we go through with business owners which outlines the key parts of your business such as the owners input, systems & processes, staff structure, leases, customer & supplier agreements, Worksafe and Health & Safety to name a few.

The importance of having these elements of your business in a current, well presented and documented order cannot be overstated. A buyer who is looking at your business will want to satisfy themselves that they are able to walk in on day one and the business systems will continue to operate as normal without you as the owner being there. This makes up the goodwill part of the transaction.

If, as an example, the systems & processes are all in the current owners head and are not documented, or the owner is so vital to the business operation that the business cannot operate without him, then the intangible asset value is diminished. This is also the same if the lease on the premises expires soon or there are no details of customers and supplier arrangements, work safe creditation or Health & safety records. If these are not documented or current they will have an impact on the business goodwill value and attractiveness to a purchaser.

Presentation is also a factor that some business owners do not pay enough attention to. I have come across cases where the vehicles are dirty and unkept (they do not need to be new but should be clean and presentable) or the premises and offices were not clean and tidy. This first impression is going to reflect badly on a purchaser who is looking at your business.

I urge business owners to have a critical look at your business from the outside and see how your business presents, not only from a physical point of view but also internally i.e. systems & processes. This is the view a purchaser is going to get so you want to make sure it is a good one.

Unfortunately there are some parts of your business operation that are out of your control such as Covid, Government policy, supply and labour shortages. These are affecting some businesses more than others but here in the Bay of Plenty I suggest that we are doing much better than a lot of other areas.

Remember, when you decide it is time to consider selling your business make sure that you take the time to prepare it and change the things that you can control so that you maximise the presentation and goodwill value of your business.

Read: TABAK Business Sales – Welcome to 2021

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Paul Brljevich
Paul Brljevich
Director at TABAK Business Sales. Paul can be reached on 027 693 4079 or paulb@tabak.co.nz

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