The Business Sales Process
One of the questions that we are frequently asked is the process involved in the sale of a Sunshine Coast or Brisbane based business. Here's a breakdown of the steps that you’ll go through if Prime Business Sales represent you:
1) Initial Business Assessment – A confidential and obligation free meeting is held with a business broker to start the process. This meeting allows the broker to ask questions and get an overview of the business, find out about the owners day-to-day roles and collect some financial information. It is also an opportunity for a seller to ask questions and find out more about what’s involved in a sale.
2) Tailored Sale Strategy- After an initial analysis of the business and its financials, a full written appraisal is given to the prospective seller giving an estimated selling price, a tailored sales and marketing strategy, as well as outlining all fee's and costs payable.
3) Listing Agreement Signed- If the prospective seller decides to proceed and put their business up for sale, it is a legal requirement that both parties sign a “Form 6” agreement. This is a standard State government form that allows a broker to act on your behalf and outlines all the relevant terms and conditions.
4) Business information collected- All the relevant information that is needed to prepare a business for the sale is collected, analysed and organised. We will need the sellers assistance to provide most of this information.
5) Information Memorandum is compiled– A thorough information memorandum is compiled to show potential buyers, their financiers and accountants.
6) Marketing strategy engaged- A marketing campaign is placed to attract interest among buyers. Our buyer database is informed about the opportunity.
7) Buyer Enquiry and Qualification- All prospective buyers who contact Prime Business Sales are required to sign a confidentiality agreement. Upon returning this they are screened for financial capability as well as their current business interests. This is all done before receiving any sensitive business information.
8) Inspection of the business– Once a buyer has reviewed the initial information and wants to have a close look at the opportunity, an onsite inspection will be arranged at a time agreeable with both parties. This provides the buyer with the opportunity to see the business up close and ask any questions that they might have. These meetings are usually informal and last approximately an hour or so
9) Pre Due Diligence- Key financial information is provided to the buyers accountant for advice prior to any offers being made. All buyers are encouraged to seek independent professional advice from their accountant, lawyer and financiers before making an offer or signing a contract.
10) Contract Drawn up - With the guidance of the broker, interested buyers are encouraged to present an offer in writing addressing the conditions and contingencies of the purchase.
11) Offer Presented to Seller- The offer is presented and the seller may accept the offer as presented, or submit a counter offer.
12) Mutual Acceptance- Buyer and Seller agree to all the terms and conditions of the sale contract. This includes any special conditions the buyer and seller may have attached to the contract that must be satisfied before the settlement date.
13) Deposit paid - A deposit for the business is paid and held in a trust account. The broker is responsible for sending the required documents to the solicitors for execution of the contract.
14) Due Diligence and Finance Period - The Buyer (and their advisers) begins a detailed review of the business, which can last for up to 4 weeks. This time period is also used by the buyer to remove and satisfy any conditions that may have been attached to the contract such as finance.
15) Preparation for handover- The buyer starts to prepare for handover and organises items such as insurance, EFTPOS facilities, etc. This step often involves working with the seller to arrange a change of phone and electricity accounts as well as preparing for the re- employment of staff.
16) Stocktake - Between buyer and seller, a final count of the inventory is held and the final sale price is adjusted. This is usually done as close to settlement as practically possible.
17) Settlement Day - All conditions of the contract have been completed and or satisfied. Buyer and sellers solicitors meet and execute all closing documents. Seller receives closing funds. Buyer is the new owner of the business.
18) Transition & Training Period - Buyer begins a pre-negotiated period of training and transition with the former owner. On Average this transition period can last any where between 2 to 4 weeks.