Listed in: Selling & succession

Get the best price when selling your business

You’re ready to sell your business and there’s no doubt you’ll want the best price possible for it. Follow our guide to help you find both the buyer and the price you’re looking for.

5 minute read

You’ve set the groundwork and are finally ready to list your business for sale – but ensuring it’s sold for the price it deserves feels like it’s going to be an uphill battle. We’ve created a guide to help business owners get the best price possible for their business. 

Show a strong financial record 

Getting the best price possible means showing off your business at its very best, particularly when it comes to business finance. Buyers will want to know that it’s a profitable business with a sound history, as well as having potential for future growth.  

To demonstrate stable business cash flow, you’ll need to take several considerations into account, including:

• whether you need to bring forward or delay any major upcoming purchases
• taking a realistic approach to depreciation and the income in your accounts
• allowing for provisions for any outstanding debts or old stock
• strengthening your business capital by selling off any unused assets or unnecessary equipment
• improving your working capital by managing your stock and tightening control of your business line of credit. 

Make sure good systems are in place 

Strong systems can be a major drawcard for potential buyers. They help show that your business is totally under control and won’t fall apart without you at the helm.  
 
You could look for room for improvement and develop new systems wherever needed. Give potential buyers the confidence that:

• your business accounting software is accurate and up-to-date
• key performance indicators are regularly monitored, measured, and acted upon
• you have a strong customer base and a smart CRM marketing strategy in place
• your staff are familiar with clearly outlined procedures. 

Dealing with buyers

Identify potential purchasers. Your lawyer, accountant, and financial advisor will likely be able to connect you with interested buyers - so be sure to let them in on your plan to sell. You can also find potential purchasers yourself by looking at: 

• your competitors, suppliers, or even customers
• new entries into the market (for example overseas businesses)
• your own board or management team
• investors and financial companies. 

If you’d like to stay anonymous, you can approach potential buyers through a sales broker, an advisor, or you can reach out to interested parties directly.

Considering your offers  

There are plenty of ways to purchase and take over a business, so you’ll need to weigh up the pros and cons of any offers that come in. Without the proper financing in place, an offer will be worthless – so no matter how good a potential offer sounds, always qualify a buyer. 
 
A buyer’s intentions could affect how much an offer appeals to you. During the sale process, see if you can find out key information, including: 

• how they plan to operate the business once they take over
• whether they have any plans for business growth and expansion
• how the sale might potentially affect staff turnover and employee retention
• whether any or all of the business will be sold off in the future. 

The final details 

When accepting an offer, think about how the buyer will pay for the business. Be sure to consider any potential tax deductions. There are a range of ways to pay, including:

• cash up-front – considered the safest and most attractive payment form, but not necessarily the most tax-efficient
• vendor finance – this is when you leave a particular amount of money in your business effectively helping finance the purchase. If you choose this route, you’ll need to investigate the buyer’s track record and business history
• deferred cash payment – if this is put forward as an option make sure it’s guaranteed. Otherwise, you may find yourself having to sell for less than you originally expected. 

Signing on the dotted line  

The chosen offer could be subject to due diligence and other conditions, involving accountants and lawyers from both sides. You may well be required to sign warranties and indemnities. As with anything you’re asked to sign, be sure to read everything carefully and seek professional advice before doing so.

Getting to this point was no easy feat, so give yourself some due credit for building something you were proud of and look forward to what’s next. 

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This material is for general information purposes only and does not constitute, and is not intended as, personalised financial advice or as a replacement for legal advice. BNZ strongly recommends you seek advice specific to your personal financial or legal situation from a qualified adviser. Neither BNZ nor any person involved in the material accepts any liability for any direct or indirect loss or damage arising out of the use of, or reliance on, all or any part of the content.