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Selling Your Business
We know you have worked very hard to build your business. Allowing LINK South Africa to market and facilitate its sale means you've made the decision to partner with the leading business broking organization in South Africa. Peace of mind combined with maximum results come only when you choose LINK.
When considering selling your business, there are many important decisions to be made. To make wise informed decisions, you need to know specific details about the best method of selling your business.
After all, you may have spent many years of hard work building the business to the size it is today and now be looking forward to retirement or moving on to something else. You want to be assured that the sale of your business will bring you the result you require.
If you are considering selling your business, do yourself a big favour and register now for a copy of your free guide, "Managing the sale of your business". Packed with useful information that will guide you through the business sale preparation, valuation and transaction process and provide you with all the knowledge you need to make the right decision.
To list your business for sale with LINK, we require the following documentation and information from you:
- Our detailed and confidential "Authority to Act" document which can be faxed or e-mailed to you for completion.
- A detailed Asset Register reflecting the second hand value of such assets (not the balance sheet depreciated value or the replacement value).
- The last 2 years' Financial Statements for your business (signed by the Seller & Accountant).
- The last 2 years' VAT Returns.
- The last 12 months' Management Accounts (excluding your personal expenses).
- A copy of the license necessary to run your business.
- A few photographs of the business (optional).
- A copy of your present Lease Agreement.
- A copy of your Franchise Agreement (if applicable)
Should you not be in a position to fax or email the above information to us, and your business is located within 100 kms from one of our offices, please give us a call and we will arrange for a representative to call on you.
Tip: If YOU were buying the business, what information would YOU expect?
All information provided by the relevant broker will emanate from, and be certified by, the Seller. The broker concerned will not attract any liability whatsoever including any claims for damages should there be any errors, misrepresentations or erroneous information given by the Seller.
Interested in selling a business? We want to speak to you
If you are interested in selling your business, complete the form below and one of our Business Brokers will contact you.
Questions about Selling a Business
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.
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.
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.
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.
What does an Information Memorandum include?We prepare a comprehensive Information Memorandum on your business. This will typically include:
- Background of the business, highlighting opportunities for a buyer and the reasons for the sale.
- The sale process and description of assets etc.
- The historical financials, trading to date and comment.
- The business valuation appraisal.
- Operational matters.
- Information on premises, including details of lease.
- Appendices including marketing material, plant and equipment schedule, etc.
This is prepared in draft format first for approval by the vendor.
What information do I need to prepare my business for sale?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 VAT 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.
What is my business worth?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 recognize 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.
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.
When is the best time to sell my business?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.
Recommended Reading for Sellers
Establishing an objective market value for your business is not an exact science, and can fluctuate depending on the kind of business you own and why you need a valuation done. There are a number of aspects to take into account, ranging from the book worth of your assets to a number of indefinable e...
To successfully sell your business you must first make a plan. By using our approach you will gain a better insight into when you should sell your business and for how much. When to sell a business? The very first question you need to consider is this: How marketable is my business? We will be able...
If you are thinking about selling your SME then it is a good idea to talk to one of our experienced brokers. As with most people who own a business you will have a large amount of money tied up in your company, and if these funds are not managed properly by a knowledgeable advisor it can have a seri...
Read more articles on selling in our Knowledge Centre.