Sell your business

Potential buyers will ask you why you are selling your business. Think about the reason behind your decision to sell and make sure it's the right one for you.

If you're selling because of financial problems, consider getting professional advice from a business adviser. Selling your business may result in more obligations you need to pay, such as employee entitlements or tax amounts from asset sales.

If you’ve made the decision to sell, refer to your succession plan (if you’ve got one). This document can help you with the sale and transition of your business to a new owner. 

Getting help from a professional can make selling your business less stressful. You can use an accountant, lawyer or business broker.

Business brokers help buy and sell businesses. They can help you understand your legal obligations, offer advice about the profitability of your business and market trends for your industry. Make sure you check their professional credentials before using their services.

Talk to family members and friends for more personal advice on your decision.

Make sure you identify and agree on exactly what to include in the sale. Knowing what's for sale will help you value your business. Consider:

• Do you want to sell the business outright including all the assets?
• Which assets don't you want to sell?
• Do you want to sell your registered business name?
• Are you looking to sell the business’ intellectual property (IP)?
• Do you want to include any property the business owns?

Valuing your business is about working out how much your business is worth so you can set the right price when selling.

There are different ways to value your business. Three of the most common valuation methods are:

1. Analysing the market – compare your business to similar businesses for sale or that have recently sold. This isn’t a formal valuation but can give you an idea of your market price.
2. Calculating the net worth of business assets – calculate the difference between what your business owns (assets) and owes (liabilities). This can give you an indication of your sale price. Include both tangible assets (such as tools and buildings) and intangible assets (such as goodwill and brand recognition).
3. Using return of investment (ROI) – use your net profit to work out the value of your business.

Ways to advertise the sale of your business to potential buyers include:

• business brokers or real estate agents
• digital media, such as social media or email marketing
• traditional media, such as newspapers or radio
• your existing networks, such as family or friends
• word of mouth
• current or former employees
• current or former customers of your business.

The way you advertise will depend on your business type, industry and contacts.

Check whether there are any laws in your state or territory about what information you need to give potential buyers.

Make sure you comply with the Australian Privacy Principles when disclosing any personal information to potential buyers. This includes personal employee, customer or supplier information.

When negotiating the sale, make sure the information you give about your business is accurate and true. You must not engage in misleading or deceptive behaviour.

You and the buyer need to agree on things, including:

• sale price
• deposit amount (usually 10% of the sale price)
• settlement period
• handover training (if any) for the buyer
• arrangements for existing staff.

A business sale agreement is a legally binding contract between you and the buyer. It sets out terms, such as:

• the sale price
• the method of payment
• the handover date and details
• the details of assets included in the sale, such as property, equipment, fixtures, fittings or stock
• any conditions that you and the buyer must meet for the sale to go ahead
• any restraint clauses, such as confidentiality or non-compete clauses, to stop you competing directly against the business after you sell.

Consider getting a legal professional, such as lawyer, to draw up the sale contract for you. They will make sure the contract:

• complies with any state or territory conditions you need to follow
• doesn’t include any false statements
• covers all aspects of the sale, such as what happens if the buyer doesn’t proceed, creditors the business owes money to or who’s paying employee entitlements.

Make sure you understand all of the contract’s terms and conditions before you sign it.

It's important to talk with your employees about the sale of the business. Let them know if: 

• the transfer of the business to new owners ends their employment with you 
• the new owner may offer them a job – known as transferring employees.

Under the Fair Work Act 2009, you must give employees written notice that their employment is ending with you or a payment instead of notice. This includes employees who are transferring to the new owner.

When employees transfer with the business, you need to give the new owner all relevant employee information. There are some employee entitlements that the new owner must recognise and others they don’t.

Capital gains tax (CGT) and goods and services tax (GST) may apply to the sale of your business.

You may need to include GST in the price of your individual business assets or repay GST credits. This only applies to businesses registered for GST.

If you're selling a small business, CGT concessions may be available.

You’ll need to think about what tax you need to pay from the sale of your business. This will help you plan and avoid a tax debt. If you can’t pay your taxes on time, you may be eligible for a payment plan with the Australian Taxation Office (ATO).

Talk to your insurer about any ongoing insurance needs for your business, such as run-off cover. This covers any legal claims made against you after you sell your business.

Once your business is sold, you need to transfer your business to the new owner. You need to:

• transfer leases, licenses and permits
• finalise tax returns, business activity statements (BAS) and instalment notices
• cancel your Australian Business Number (ABN)
• transfer or cancel your business name.

Until the transfer to the new owner happens, you’re still responsible for any lease agreements and obligations that are part of the business.

License transfers can take up to 12 months, so it’s important to plan for this early in the sale process.

If you’ve developed a succession plan, you can use this to smoothly transition your business to the new owners.