Check List for Selling a Business Privately

Posted by on July 10, 2013

checklistIf you want to sell your business and decide to do it privately, you will definitely save a substantial amount of money.

For example, you won’t have to pay agent fees or a broker’s commission, which is thousands of dollars in upfront fees and then up to 12% of the sale price.

Avoiding these fees will allow you to set a more attractive asking price, as most sellers try and incorporate broker fees into their asking price.

This may discourage a potential buyer from showing interest or making an offer. Setting a more attractive and competitive price usually results in a faster sale.

Private Sale Expenses

There are some advertising expense involved when you are selling a business privately, but the cost will be insignificant when compared to paying a typical broker’s commission.

Advertising your business for sale on websites such as www.Business-Trader.com.au is the best option and will set you back a small upfront, one time listing fee starting at $147.

You Are in Control

By selling a business privately, you will be in control of the entire process and as a business owner and investor, you are probably used to making important decisions on a daily basis.

If you are prepared to deal with any negotiation, taxation or accounting issue that may come up when your business is on the market, you will probably be happier selling it yourself rather than involving a commercial broker.

If you decide to go this route, these are the steps you should take:

  • Begin by determining exactly what your business is worth. You can do this by finding out what similar businesses have sold for recently, going online, checking related trade magazines and discussing the matter with other people in your industry. Ultimately your accountant is the best person to speak with.
  • Decide if you want to deal with all of the legal issues related to the sale, or whether you should contact an attorney. If you do, you can determine the scope of his or her work. In addition, you can arrive at a fee for the entire project or agree that billing will be done on an hourly basis. In the latter case, have your lawyer provide you with an estimate, and consider including the phrase “not to exceed…” in your agreement.
  • Once you know what your business is worth, you should advertise it where it will get the best response, which is online as previously mentioned. Also, depending on the type of business you own, advertising the sale in a business magazine or your local newspaper as an extra arm of advertising is a good idea.
  • When you begin to receive offers from prospective buyers, you will want to respond to them promptly. At times, the number of responses may seem surprisingly large, but you will end up rejecting some offers immediately because they are either conditional or too low.
  • Once you have an offer that satisfies you and you decide to close the deal, a deposit should be taken at which point your business will be off the market. Then you need to stipulate the terms of settlement followed by the transfer ownership to the buyer. It is also wise to agree on a method of payment that will benefit you the most in regard to taxes related to the sale.

Selling Privately is the First Choice

Thanks to the power of the internet, selling a business privately started out as a popular trend, but is now the first choice for business owners.

Author: Andy White

Andy White holds a Masters of Business Management and after a career as an Officer in the Australian Army, worked as a Business Consultant and now operates his own successful Real Estate business on the Queensland coast.

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