Wanganui Rivercity Press Article
Christine Savage is a Senior Accounting Technician within our business advisory team.
If you have a particular subject you would like Christine to cover in an article contact her on csavage@silks.co.nz or
ring her on 06 345 8539.
Not just today or next year but say five or so years from now when you start thinking about retirement.
Often one of the most valuable assets you have is your business, so when the time comes to sell it of course you want the best price.
PLAN AHEAD
A last minute decision to sell may not produce the best result. For some businesses ill-health or family obligations may force owners to act in haste.
Planning ahead allows you to present your business in the best possible light, simplifying the sale process & ensuring the best outcome.
PRESENTATION – First Impressions
A potential buyer’s first impression is important..
Clean up and paint if necessary. Get rid of rubbish. Don’t hoard it. This goes for old and/or obsolete equipment. If you no longer use it, sell it, even if only for scrap metal. This will generate some cash now, keep the sale price down and make it easier to sell.
A buyer will want to heavily discount obsolete inventory or refuse to buy it. The less inventory the greater the potential for a higher value on intangibles (i.e.Goodwill).
PROFITABILITY – It’s All About the Money
Most small business are valued using a multiple of earnings. Are your earnings optimal? Do they reflect a well run business.
Are all the expenses being deducted actually business related? What about the personal cell phones for the family, or fuel in their vehicles, travel etc. These additional expenses may reduce the profit for tax, but they also depress the selling price.
Look at ways of reducing expenses & increasing income in the years coming up to the sale of the business.
As always talk to your accountant and solicitor before you list the business for sale. They can help you avoid pitfalls.
Published - 3 June 2011
