We have LOADS of experience helping our clients when they are looking to buy a business. We review the information provided by the vendor and are able to then highlight points and issues that our client can raise.
Due diligence is crucial and not something we can overlook. A recent newsletter from Clyth Macleod showed 3 points to consider when selling your business that every vendor should know:
1. Have a good and genuine reason for selling. After a buyer asks “How much?”, they ask “What is the reason for selling?”. The reason should be logical to the buyer. I have heard overseas buyers joke about their concern buying a New Zealand business due to the number of vendors selling with the reason being ‘poor health’. Of course, poor health is a genuine and common reason for sale. Retirement, following a long period of ownership is always reassuring to a buyer.
2. Be prepared to provide as much training and support as possible. Taking ownership of a business is intimidating, there is significant risk for a buyer. An owner who is prepared to stick around for training and be available by phone and email ongoing is going to mitigate some of the risk. Being prepared to work in the business for a period of time, perhaps up to a year, following settlement is further reassurance. Theoretically, reducing the risk should increase the value of your business. For many businesses, there is just too much to learn in a 2 or 3 week training period.
3. Have the required information ready for due diligence. If you are serious about selling your business make sure you have the information readily available to provide to a buyer as they request it. Having this easy to obtain allows the buyer to build confidence in you and in your business.
Due diligence covers many aspects of your business. The financials, lease details outlining security of tenure and rent, employees of the business, customers, suppliers, leased equipment etc the list goes on. Consider what is appropriate to your business and have the information prepared. Due diligence can be conducted at different stages releasing information as and when stages are completed.
We also have a handy guide on our website ‘How to buy a business’ you can download for free. A 7-step guide to help you overcome the obstacles of buying a business. And of course, you can always talk to us to help with this process. We have many years’ experience working with clients buying or selling and will ensure you are set up to take on a viable business. Contact our team to talk more.
