ABOUT 80% of Australian businesses are privately owned, and over the next 10 years the baby boomers will be retiring.
In fact, 40% of business owners are planning to leave their businesses in the next five years.
So it should come as no surprise that in the past few months we have had a number of inquiries from clients asking about the value of businesses, marketing it for sale and the amount of tax that would be paid.
The "what's it worth" question is vital because 50% of business owners expect the proceeds from the sale of their business to be the primary funding source for their retirement.
There are a number of ways for owners to "exit" their business including; succession (to children, family members or current management or employees), merging with another business, capital raising or initial public offering via the stock market, sale of the business as a going concern, or simply close and liquidate.
Sixty per cent of business owners would prefer to sell the business as a going concern.
So how do you maximise the sale price of your business?
The secret is in the preparation - ideally, preparations must be made well in advance, maybe years, so that the business is ready for sale. Also, it's a beauty parade. A number of things must be attractive to a potential purchaser including:
- Relationships with customers and suppliers are with the business, not the existing owner
- The business has sound operating systems and a clear strategy for the future
- Intellectual property and trademarks are protected and up to date
If you identify who the potential buyers of your business are likely to be, and anticipate what they will be looking for, you will position yourself to maximise this final return on your investment in your business.
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