Selling a Business

If you intend to sell your business the best place to start is to consider the matters in Buying a Business, on the basis that a buyer will be looking at those issues. You should provide all of the relevant information to your lawyer and the agent so that they can put together a meaningful contract.

Examples of information you will need to provide are:

• Balance sheets, profit-and-loss statements, annual reports and any cash-flow statements of the business
• Business name registration details
• Development approval and conditions
• List of assets
• List of employees, relevant awards, employment contracts and current entitlements
• Intellectual property such as:
  • Equipment leases and hire purchase agreements
  • Web site and domain name email address
  • Any other intellectual property used in the business including licenses, patents, trademarks
    Customer base and suppliers
• Key contracts.

Generally, consider what information you would want if you were buying the business.

Confidentiality Agreement

You should have any potential purchaser sign a Confidentiality Agreement. The Agreement provides that the purchaser will not disclose any confidential information, such as financial statements, which is provided to them during the course of negotiations. The Agreement may be prepared by your lawyer, although business brokers often have their own form.

Agency Agreement

The agent will ask you to sign an agency contract. You should have it checked by your lawyer. We recently had to advise a client after they signed an agency contract with a clause in it which we normally require the agent to remove. The agent claimed that the clause entitled it to two commissions on a sale. We were involved in extensive negotiations to reduce the amount which our client eventually agreed to pay. That would not have been necessary (and costly for the client) had we had the chance to negotiate the clause out of the agreement.

Helpful advice:

You will find information on the sale and purchase of businesses in the hospitality industry on the web site of Close Encounters www.closeencounters.com.au.