In most every business owner’s life, there comes a time when they want to sell up and move on. Indeed, if you are here reading this, you are probably already thinking about it.
To help you prepare your business for sale, here are some general steps you can take to make the transfer as pain-free as possible.
Check Your Premises Lease
If your business relies on walkthrough traffic, or is otherwise location dependent, buyers like to see decent lease periods and renewal options contained in your lease. If your lease does not contain any renewal options, you might want to consider approaching your landlord to negotiate additional options prior to listing your business for sale. Businesses with limited leases or no options may be less attractive to prospective buyers.
You should also check what processes you must undertake prior to assigning the lease to a prospective buyer. Most (if not all) commercial leases will stipulate that the Landlord must consent to the sale. We can assist you with this process and any questions you might have about it. Keep in mind that some buyers like to renegotiate a new lease and that this has certain advantages.
Check Your Equipment Leases
Depending on your business, some of your equipment may be leased. In cafes or restaurants, common leases include commercial fridges or freezers, bain-maries, ice and coffee machines, and other miscellaneous items. These leases may need to be assigned to the buyer, or, where they have concluded, may still have outstanding PPSR registrations against your business which will need to be removed prior to sale. It helps to know what is required to assign the lease before you list the business for sale.
Check Who Owns the Business Assets
To sell your business you will need a list of all items that form part of the sale. When you compile this list, we recommend taking the opportunity to check who owns each of the assets. It is quite common for assets such as licences, ‘rent to buy’ or leases to be held by separate entities; identifying these prior to sale will help smooth the process.
Check Your Plant and Equipment
In almost all business sales you will warrant that the plant and equipment that forms part of the sale are in good, working condition. Prior to listing your business for sale, we recommend reviewing the state of your plant and equipment and repairing or restoring where commercially viable to do so.
Check Your Records
Buyers will usually wish to verify the profitability of your business and like to see well-kept financial and business records. We suggest taking the time to set yourself up for success by compiling all of this information ahead of time to save any last minute easter egg hunts for old documents. Your accountant should be able to assist with this.
This usually includes compiling financial information, copies of licences required to run the business (these may or may not be transferrable), copies of contracts that your business is party to, records of your employees (when they started, annual leave owing etc), and any other relevant information.
Check Your Intellectual Property
If you conduct business under a business name (other than your personal name), you should ensure that it is registered with ASIC prior to preparing for sale. This will need to be transferred to the Buyer at Settlement.
If the business name is not trade marked, and the sale is not urgent, you may also want to consider obtaining one. Registering your business name with ASIC does not grant ownership of the name but a trade mark provides protection to your business name. If the business name is an important asset to the business, a registered trade mark may be attractive to your prospective buyers. If you wish to register a trade mark prior to selling, mylegal can assist you with this process.
Speak to a Business Broker
A good business broker can assist in locating a buyer for your business and can provide valuable information and advice throughout the process. They may also assist in negotiations between the parties and, in general, can make the sale process less stressful for you.
This article is provided for general information purposes only and does not constitute legal advice. Australian law is complex and ever changing, and you should always obtain advice specific to your circumstances from a qualified legal practitioner. If you require advice, please contact us on (07) 5479 2457 or at [email protected] to see how we can help.