LINK
The authority on selling businesses™

Now that you are considering selling your business, a well-planned approach to the process is required to ensure you are selling at the right time and will achieve the best price for your business.

What is the best time to sell?  You need to assess the marketability of your business.  We can assist with this based on our knowledge and experience in the market.  If necessary we will suggest to you a more suitable time or changes that you could make in the business prior to placing it on the market in order to maximise it's value.  In our initial meeting we will advise what you need to do to prepare the business for sale.  A buyer will require information about your business and the presentation and accuracy of that information should be made in a way that gives prospective purchasers an accurate summary of the business.

As part of your decision making process you may consider using the services of a business brokerage.  In selecting the right company you should consider the following:

1. Does the company specialise only in business sales or is it an add-on to a real estate operation? 
2. Does the company have brokers who specialise in your industry?  You don't want to have a broker who has no experience and knows nothing about your industry.
3. Does the company get results?  What is their track record in business sales? 
4. Are they professional and ethical?  Under the Fair Trading Act you are linked together with your broker if something is said that is incorrect.  This can have severe legal repercussions, so you need to be assured that you are dealing with an experienced and professional company that is licensed under the Real Estate Act. 
5. How big is the company?

There are many advantages in using a business broker.  While you are busy with the day to day management of your business a business broker will handle all the calls, qualify all prospective purchasers and ensure that they are genuine and have the financial ability to purchase.  If you try to sell the business yourself it can be much more difficult for you to keep the sale confidential from your staff, customers and suppliers when there are prospective buyers personally contacting you. 

We have a database of qualified buyers waiting for certain businesses, and in many cases we sell to waiting buyers before the business is advertised.  This avoids having to market the business and in many situations an excellent price is achieved as buyers waiting know the value of your business.  They may have been in the market for some time and will pay a good price for the right business.

Using LINK

LINK is a member of the Real Estate Institute of New Zealand and must operate to strict professional and ethical standards.  We are required by law to obtain in writing the authority appointing us as agent. In normal circumstances we require an exclusive mandate for a minimum period.  Our fee is success based.  We get paid only when we help you find a buyer for your business and then we get paid a percentage of the total sale price achieved.

Finance

If a buyer requires finance to purchase the business you have the option of leaving in an amount or we can direct buyers to financial institutions.

Training the new owner

Depending on the complexity of the business, an agreed period of time is negotiated between both parties for the owner to stay on and train the new owner at no extra cost.  If a longer period is required, then an hourly rate or fee can be negotiated.

7 STEPS ... to get the best price for your business

When selling a business, the aim is obviously to achieve the best price and make a good return on your investment. While such markets are cyclical in nature, and the top price possible may change accordingly, there are several ways you can optimise the price your business reaches.  Here are seven points:-

1   Price it right
If you price your business too high, the serious buyers won’t even look at it; too low and you are throwing away hard earned money.  A business broker can guide you on what the market is paying for similar businesses to yours and what else is on the market.

2   Present it right
You will get a better price if your business is sparkling clean and tidy – from the signage to the office, exterior, and storage areas.  Your plant and equipment should be in good operational order and repair.

3   Prepare for the sale
Buyers (and their accountants) will want to see up-to-date figures – financial accounts, daybooks, banking and GST returns.  Also, leases should be available for inspection and have a reasonable term to run.  Being ready with this information keeps the sale moving along.

4   Allow time to sell
On average, businesses take three to four months to sell.  If you have to sell in a hurry you are in a weaker negotiating position and likely to get less.  Sell at the right time for you.

5   Write down your systems
Show the prospective buyer how easy it will be to take over.  List your suppliers and major customers, the jobs to be done, the hours of operation, service providers, and what records must be kept.

6   Be totally honest
When discussing the business with a potential buyer, tell it ‘warts and all’.  Even if it is only a small fib that the buyer catches you on, you will lose their trust – and probably the deal.  If it is a large lie (a ‘misrepresentation’) then you could end up in court.  We live in an expensive and litigious age and there is all sorts of legislation affecting business sales.

7   Use a business broker
Do what you do best – carry on running your business.  An experienced business broker can guide you on pricing, market your business widely, maintain confidentiality, qualify genuine buyers, produce offers and prepare contracts – and use their negotiating skills to get you the best possible price!

If you are interested in selling your business contact us directly, or register with us and a LINK Business Broker will contact you.

FAQ's

Once you have decided to sell there will be many questions about the process.  The following questions and answers will take you step by step through the process using LINK as your specialist broker.

How do I decide on the best time to sell? 
What is your business worth? 
What information do you need to prepare? 
How is the business marketed? 
How long will it take to sell? 
What does an Information Memorandum include? 
How does negotiation work? 
What can I do to help sell my business? 

Q.  How do I decide on the best time to sell? 
A.  We will schedule a meeting to discuss the specifics of your business and your personal plans for exiting from it.  With our experience in business sales we can prepare an exit strategy for you, taking into account factors that will be instrumental in finding the right buyer at the right price for your business.

After we have an understanding of your business we will make suggestions on strategies that may be of benefit to you in the preparation of your business for sale.  Buyers will be looking for certain things when considering your business and our recommendations can make the difference in effecting a quicker sale at a better price.

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Q.  What is your business worth? 
A.  This is a very important aspect of selling your business and probably the most contentious.  There will be many views on what constitutes value.  Sellers will have one view, buyers another, accountants another, etc.  There are multitudes of formulations, all of which produce different figures depending on who you’re talking to.

It is important to recognise the price range your business is likely to sell in.  If you’re unrealistic it won’t sell and you and likely buyers will become very frustrated.  You could also be harming the prospects of a sale sometime in the future.  If you’re too low, then obviously you miss out or create suspicion.

What you want for your business, or what it owes you is, is not its value.

Businesses sell in an open market that is with a willing buyer and a willing seller.  The market determines the price – the true value.

When we meet with you we will gather detailed information on your business and then present you with a Market Appraisal.  This gives you the price range we expect your business to sell for on the open market.  This is not a valuation and cannot be used for that purpose.

For a formal valuation appraisal and opinion, many business owners use LINK to have a written opinion prepared on their business and establish the price range.  This is useful in the case of one partner wanting to buy out the other partners, a management buyout or valuation for family estate planning. Should you require a written opinion to establish the value of your business for the purpose of buying or selling, estate planning, or management buy outs, please visit Business Valuation Appraisal & Opinions.

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Q.   What information do you need to prepare?
A.   It is important that you have all the right information and details available before you start to market the business.  A business well prepared for sale will sell more quickly.

As part of our service we will assist you in the preparation of this information and once again it needs to be presented in the right way with the right information.  This information is also required to establish the selling price for the business and certain calculations need to be made to work out the true net profit of the business.  Items you should have available are:

• Profit and Loss accounts from the previous 2 to 4 years.
• Identify and quantify abnormal and/or non-recurring costs in accounts.
• Identify all items of personal and drawings nature.
• Copies of internal accounting reports for year to date and/or GST returns if available.
• Copy of the Lease.
• Brochures or information on your product or service.
• Background on the business.
• Staff details.
• List of plant and equipment and any equipment leases.
• Copy of franchise agreement if a franchise business.

Like many small business owners you will probably have to search out these items and some may need to be updated.  Make sure the financial information is current and accurate.  If you’re selling half way through the year you could get your accountant to prepare half-year accounts for the purpose of selling.

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Q.   How is the business marketed?
A.   Most business owners want the sale of their business handled confidentially.  For commercial reasons they don’t want their competitors and suppliers to know they are selling.  Once again this is the advantage of using a specialist business broker.  We work with potential buyers through the various stages and you only meet with them at the final stages of the process.  This leaves you to get on with business and keeps buyers away from calling or visiting you at work.

We will prepare a comprehensive marketing plan for your business incorporating notes on how to present the business, a detailed Information Memorandum prepared by us, advertising schedule and website and database marketing.  In many cases we find buyers from our database of qualified buyers.  If confidentiality is required, any advertising is of a generic nature and never identifies the particular business.

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Q.   How long will it take to sell?
A.   This will vary depending on the complexity of the business and the industry.  Normally, if all the information is available and the business is priced relative to the market for that type of business a sale should be concluded within 12 weeks.

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Q.   What does an Information Memorandum include?
A.   We prepare a comprehensive Information Memorandum on your business. This will typically include:

1. Background of the business, highlighting opportunities for a buyer and the reasons for the sale. 
2. The sale process and description of assets etc. 
3. The historical financials, trading to date and comment.
4. The business valuation appraisal. 
5. Operational matters. 
6. Information on premises, including details of lease. 
7. Appendices including marketing material, plant and equipment schedule, etc.

This is prepared in draft format first for approval by the vendor.

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Q.   How does negotiation work?
A.   When a buyer indicates they want to make an offer, this needs to be in writing and in the correct format.  Any verbal offers can become complicated, as they do not detail the terms and conditions of the offer.  As part of our service we prepare a Sale and Purchase Agreement using the Auckland District Law Society’s Agreement (or equivalent territorial document), which details the offer being made, and the terms and conditions.  We will liaise between both parties in the process of negotiation to facilitate agreement between both parties.  In many situations we can recommend solutions to issues that may be of concern to either party.  As a business owner you need to ensure you are protected by having the right clauses in the agreement and it is advisable to seek professional advice.

Q.   What can I do to help sell my business?
A.   Have all the information required ready and current.  Buyers want to know what is happening in the business currently along with any existing or future trends.  Have your accountant prepare up to date financial information.

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