MARINE BUSINESS FOR SALE:
Whether you’re buying or selling a business in Australia, determining its market value is crucial.
Several methods are used by business brokers, valuers and accountants to calculate what the business is worth. In this article, we explore the most common business valuation methods employed in Australia so you can better understand how to value your enterprise.
Determining fair market value is possible with a mix of industry and financial knowledge. As a business broker and valuer, I have determined the value of many Australian businesses using various methods. The approach depends on the industry, business model, assets, and other factors.
Selling your business can be an overwhelming endeavour. With so many moving parts, it’s easy to feel lost in the details. Yet, you can navigate the process smoothly and successfully with the proper guidance. As an experienced business broker, I have facilitated many business sales. So, I understand both the rewards and challenges involved when transitioning a business to new ownership.
In this article, I discuss four areas to spend time on that will help prepare your business for a lucrative sale. Get these right, and you’ll be well on your way to a positive outcome.
UNDERSTAND WHY YOU’RE SELLING
Before listing your business, carefully consider what’s motivating you to exit. Are you ready to retire? Eager to pursue other ventures? Or facing business or personal struggles?
Whatever the reasons, be upfront; prospective buyers will inquire about your motivations. Transparency from the beginning builds trust throughout the process. A level of trust between the parties can save a deal from collapsing if genuine surprises arise during the contract or due diligence stage. Australians have a degree of social trust in our culture that doesn’t exist in other countries; no one likes to be told fibs at any time, let alone during a contract.
PRESENTING FINANCIAL STATEMENTS
Financial documents provide tangible proof of your business’s profitability and stability. As pricing reflects profits, prospective buyers will want evidence of profits reflecting the selling price; future potential simply doesn’t come into it. Complete financial statements need to be prepared by your accountant before going to market. Seek your broker’s advice to ensure that your financial statements are well organised, present confidence, are accurate, and are readily available.
YOU’LL NEED A TEAM
Selling will leave money on the table and expose dangerous liability risks. It can be considered for businesses under $100,000. However, sometimes, selling fees become a commercial decision; that’s why Benchmark has three services available, allowing all business owners the best chance of a successful, profitable sale.
Usually, an informed accountant who is across your business, a solicitor specialising in commercial and business transactions, and your experienced broker create your team. You’ll know if your broker is right for you if they understand the required standards regarding financial statements for the market and can refer to several reliable solicitors and finance brokers, with relevant expertise, to ensure the deal proceeds to settlement. Some of the biggest mistakes I have seen parties make is to insist on using a solicitor simply because they have used them before with wills and estates.
With expert industry knowledge and sales mastery, brokers maximise your business’s value throughout the process. Solicitors review contracts to catch errors and protect you, and accountants verify that financial reporting complies with all laws and standards. Understanding what each party brings to the deal allows you to leverage your team’s expertise at every turn.
PAYMENT TERMS
Finally, it’s becoming more common for deals to have a variety of payment clauses, whether that’s retention, earnouts, buyouts or vendor finance. Consider what is most important to you: cash up front or potentially a greater, albeit staggered, payout.
No matter which payment terms you accept, there will be implications to consider, including tax, risk level and missed opportunities.
If you are considering selling your business, ensuring you are across these areas will transform what can easily be an overwhelming experience into a smooth and lucrative exit. If you wish to discuss the sale or purchase of a business, then reach out today to schedule your free consultation.
Mick Godwin is a professional business broker with over 10 years of experience in business and assisting clients in buying and selling businesses across Australia. He specialises in businesses valued between $500,000 – $5 million in the marine and rental and leasing sectors. Mick holds an MBA focused on business strategy and has extensive firsthand experience starting, operating and selling his business. Known for his integrity and mastery of the sales process, Mick guides clients to maximise sale prices while avoiding common pitfalls.
Mick Godwin
Registered Business Valuer
0416 638 154 www.mickgodwin.com.au
mickgodwin@benchmarkbusiness.com.a
www.benchmarkbusiness.com.au
166 Ashmore Road, Benowa, Qld 4217
Published in print January-March 2024
