- Specialist Business Brokers in Melbourne Victoria
Selling An Industrial Business
Selling a Business through a Business Broker
A business broker works similar to a real estate agent in the sale of a property. They will use an Exclusive Authority and are covered under the same legislation, such as trust accounting for deposits.
(1) Preparing for Market
The business broker will prepare the Business Profile, marketing plan and ad with your consultation.
It is important to ensure information such as financial information, add-backs, business description, exclusive agreements, list of equipment and other material is all accurately discussed before going to market. If not, a potential buyer who discovers otherwise during due diligence will likely walk away or re-enter negotiations with harsh terms of sale. By discussing issues upfront, your business broker will be able to address them and ensure an offer reaches settlement smoothly.
Some information may be confidential, such as exclusive agreements or IP. These are usually withheld and shown later on during the due diligence stage long after the potential has been verified, met with the vendor and offer accepted with deposit.
(2) Selling a Business in the Marketplace
The primary role of the business broker in selling an industrial business will be to maintain confidentiality during the promotion and sale of the business. This includes:
* ensuring the ad does not disclose pertinent information that could identify your business;
* screening enquirers for who they are and what they are looking for e.g. not staff or competitor, or just looking without funds ready;
* ensuring the enquirer signs a Confidentiality Agreement or, if a competitor, a Non-Disclosure Agreement;
* not disclosing private information in the Business Profile, such as supplier and customer names; and so on.
Some industries only have a few key local players so your business broker should be able to manage the process appropriately. Flagged leads should be discussed with the vendor. Unfortunately, some brokers hand out detailed information to consultants and industry sticky beaks so as to look busy.
To facilitate the continued interest of a potential buyer, the business broker will organise an inspection of the business with the vendor. This is typically after business hours when no staff are around.
(3) Agreed Sale to Settlement
A Heads of Agreement or Letter of Offer will be drafted by a potential buyer to make an offer in preparation for a Contract of Sale.
After agreeing on an offer, there will be a deposit, due diligence, finance application, lease negotiation and drafting of the Contract of Sale.
When the Contract of Sale is signed by both parties, handover with introductions to stakeholders may begin until settlement day for business transfer and a further handover period.
Prior to settlement, there will be a stocktake if relevant. Then there will be settlement funds, transfer of ownership and other arrangements.
Please note that when you sell a business, you are not selling the company. The buyer will have new accounts receivable and payable. Any liabilities or debts will remain with the company unless otherwise stated in the Contract of Sale.
The Next Step
Contact us for a confidential discussion about selling your particular business. We can meet even after staff hours to suit your privacy. If you request, we can provide a business market appraisal report. Call 03 9580 3517 or contact us here.