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How To Prepare Your Business For Sale

Many businesses have had their exit plans scuttled by operating constraints and by the economic environment we have been working in. Business owners now find themselves busy working on their business models and profitability to ensure they have a business that will survive, thrive and sell in the future.

Richard O’Brien, from the NZ business for sale website nzbizbuysell, says “Fortunately not all businesses have been affected, and there are some great opportunities that continue to be listed for sale. While most businesses have a dent in their cashflow, many have mostly recovered and some have even flourished. Astute business buyers will see past the bruised profits and the effects of the covid lockdowns, and see the true potential of a business. As buyer interest is high, this all points to a great time to sell a business.”

If you own a business, then you have put a lot of time, effort, and equity into growing your enterprise. And when it comes time to sell your business, it is likely your main objectives are to get a sale and maximise the sale price on the terms that suit you.

“Selling your business will be one of the most important things you’ll do and you get one chance to get it right.”

When preparing your business for sale it's important to plan it well. There are a number of factors that will influence your business's value and how quickly it sells.

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No matter what the economy, when a business is being appraised by a perspective buyer they will be weighing up a number of factors when assessing its value. Just as the seller wishes for the best price and favourable terms, the buyer will be wanting to close the deal at the lowest price possible. Therefore, building the value in your business is paramount to achieving the best outcome.

Where possible, plan your exit to ensure you get the best price for your business.

Key characteristics that add value are: strong cash flow, a good history and reputation, being a niche business with room for growth, the location, having good plant and systems, being in a growth industry with a competitive advantage, and having good staff, products and services.

Characteristics that can lower its value are: being a business in distress, having weak financials, a small customer base and a poor industry outlook, engaging in price cutting, having key relationships held with the owner, having poor records, systems and plant, and selling dated products or services.

If possible attend to these before you list your business for sale as they will help ensure you get your best possible price and a sale. It is important you have a relevant, well-organised and systemised business with a future.

For more information on how to maximise your prospects of a sale at a great price, check out how to sell a business post lockdown and The 9 Steps to Selling a Business.

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