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59A Stewart Avenue Hamilton South, NSW 2303 Australia Phone: +61 2 4962 3388 Fax: +61 2 4969 5682 |
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ABN: 63 002 457 561 Licence No. 310 520 |
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Legal fees vary slightly from firm to firm, however most successful business operators will tell you that it is more important to get good legal advice than it is to get the cheapest legal advice. If you have developed a good working relationship with a solicitor there is no reason to change solicitors provided you are satisfied that your current solicitor possesses the required skills to advise you appropriately in the acquisition of a business. It makes good business sense to phone your solicitor and seek to obtain an indication of what the legal fees are likely to be when you purchase a business not from the point of view of bargaining but rather planning and budgeting to ensure you are left with sufficient working capital. OTHER COSTS: There can also be other substantial costs when purchasing a business. It could be that you will be required to pay a bond to a landlord or you may be required to be trained. Sometimes when purchasing franchise businesses, the franchisor will charge a training fee to ensure you are sufficiently skilled and competent to run the business before you take over. The cost of this training can sometimes be substantial, equally when buying a newsagency there are additional costs to ensure you are sufficiently trained in the use of gambling terminals. Equally if you were to be purchasing a post office there are costs associated with training procedures to ensure best practice outcomes. It should be remembered that it may take some time for you to be trained in some of these disciplines and not all training is available immediately. Sometimes there is a queue and you may have to wait 6 to 8 weeks before your training can commence. How much money should I put aside for working capital? The answer to this question will vary with the type of business being purchased. Businesses that have no debtors generally have a need for smaller quantities of working capital. Businesses that carry large debtors can cause acute cash flow problems if the problem is not addressed early. You need to remember that if you run accounts where people pay you after 30 days it may well be some time after the first month that you actually receive payment. During this time the merchandise that was on your shop shelf has been removed by your credit customer. A debt has been created and if you are not careful to provide to have sufficient capital you will have no stock to sell and a whole lot of debts to collect. It is true to some extent that debtors can be offset by creditors but this forward planning is something that should be embodied in your business plan, but if not, you should seek professional advice from your accountant. Answer: Many vendors and purchasers undertake to determine the value of stock on settlement. In these circumstances the purchaser pays for the business and as part of the contract undertakes to pay for the stock within a certain period of time. On the day of settlement the vendor and purchaser count all the stock in the business and the vendor extends that stock to determine its value. The purchaser is then required to pay for the stock upon demand. In larger businesses professional stocktakers can be engaged to do the job for you. Stocktaking can be a process that involves many people and can take several days to complete. In these circumstances it is wise to engage the services of a professional stocktaker. Should you at any stage require these services please contact one of Wilsons’ consultants and we will be happy to provide you with the names of several professionals in this field. Answer: Most leasehold businesses take 6 to 8 weeks for the sale to be completed. Generally it is the assignment of the lease itself which takes the most time. Freehold businesses which involve the acquisition of land and buildings can sometimes take a little longer. We recommend you speak with your solicitor to get a better indication of just how long this process will take in your instance. Who organises the changeover of power, gas, telephone and other services? Answer: Generally your solicitor will provide you with a checklist and together you will arrange the change over of most services. It is wise to remember that apart from the transfer of obvious things such as power, gas, telephone, there are many other transfers that need to be organised such as meeting suppliers and creditors to ensure supply of product. Establishing accounts with marketing and advertising personnel. Each business will have a different set of requirements but your solicitor and broker will always endeavour to assist you in this regard. How will I know what to do when I take over? Will someone teach me how to run the business? Answer: Wilsons Business Brokers generally arrange for outgoing vendors to train ingoing purchasers over a period of time. Common practice is that a vendor will train a purchaser after exchange of contracts but prior to settlement for a period of say two weeks. Then after settlement for a further period of two weeks the vendor will generally stay on in the business and continue to train the purchaser (new owner) for a further period of two weeks. Sometimes it is just simply not possible to learn everything that is required in a short period of time. In these instances most vendors are prepared to make themselves available for training purposes after settlement and some will even make themselves available as paid consultants as required. Do I have to pay the broker a commission for finding me the business? Answer: No, business brokers in N.S.W. are commissioned by vendors. It is the person selling the business that generally pays the broker for the service he or she provides. Who does the business broker represent? Answer: The business broker’s client will generally be the vendor. The vendor engages the broker to act on his behalf to find a suitable buyer to buy his business at a price he is prepared to accept. QUESTIONS ASKED BY VENDORSHow long will it take to sell my business? Answer: The time it takes to sell a business is generally determined by how well the business is presented in the marketplace. Some businesses take longer than others but generally most business brokers in N.S.W. would seek to obtain an agency agreement for a period of six months in which to sell the business. How much is my business worth on the open market? Answer:: Some businesses vary in value. It is not sufficient to say that all businesses should provide a 40% return on investment. Some business categories have different methodologies of determining value. Most businesses generally are saleable if they provide a return on investment between 30-40%. Speak to a consultant at Wilsons Business Brokers and they will discuss with you on an obligation free basis just what your business is likely to bring in the marketplace. Who is likely to buy my business? Where will the buyer come from and how will you find him/her? Answer: The personnel at Wilsons Business Brokers are highly skilled in this regard. Sometimes they will identify buyers from a large data bank. Wilsons will have buyers waiting to buy specific types of businesses. They will have larger corporations and sophisticated investors looking to buy a particular type of business. The buyer for your business may well come from the local region but it could be your buyer comes from Sydney or Melbourne or even from overseas. Most people contemplating the acquisition of a small business will cross the path of Wilsons Business Brokers at some stage. Wilsons are constantly servicing a huge data bank of potential purchasers for businesses along the eastern seaboard. If you are contemplating the sale of your business, speak to Wilsons about such things as the number of people who view their website. How they produce and distribute a colour catalogue of businesses for sale, the high referral rate of banks and other lending institutions. Wilsons Business Brokers is a member of the Australian Institute of Business Brokers as well as the International Business Brokers Association and from these two industry institutes Wilsons have a good working relationship with brokers all round Australia and in fact other parts of the world. How can I sell my business on the quiet, without telling the world it’s for sale? Answer: Many businesses are sold without even being advertised. Quite often there are buyers waiting to buy businesses but if you are not fortunate enough to find a buyer from Wilsons data bank a representative of Wilsons will tell you some of the trade tricks they have at their disposal to market your business without putting it in “neon lights.” Most purchasers looking to acquiring businesses are required to enter into confidentiality agreements before they are provided any information on businesses that are offered for sale on a confidential basis. Rest assured that confidentiality is a pre-requisite for many people, and Wilsons is mindful of the importance of this process. What information do I have to provide to you in order to sell my business? Answer: When Wilsons list a business for sale the actual listing process can take approximately 90 minutes. As part of listing the business, it will be necessary for you to provide a great deal of information so that Wilsons can prepare what is called an Information Memorandum. This document will be made available to purchasers so that all the required information is available to them to make an informed decision. Wilsons will provide you with a list of information they require in order to best market your business. |
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