subject: How Are The Books And Their History Looking? [print this page] The clearer your financial figures, the easier it will be to attract a suitable buyer.
Ideal figures are ones that are simple and clear to understand. We see a lot of confusing financial figures in this business, and if you don't understand yours, a potential buyer has no chance of understanding your financials. And what does that mean? No sale!
Take a close look at your information and see if there is an easier way to present it. Simplifying your books may take time, but it will definitely pay off. Buyers will appreciate both detailed and simplified explanations of your business--besides, you never know what kind of buyer you will come across. It may serve you well to be extra prepared.
Your figures should have at least 3 years of strong profits that are either steady or increasing.
If your figures show erratic expenses or periods where income has dramatically declined, this will alarm buyers. You will need to be able to explain this glitch. Again, your buyer is about to invest a large sum of money toward this business purchase. It's important to gain their trust first by good record keeping. Otherwise, they will quickly lose interest.
If you do own more than one business and mix that information together, this will confuse the buyer. You should have at least 12 months of financials for each business, where you can clearly demonstrate the business's profits on its own; this will make each property look significantly stronger in the long run, indicating each has staying power.
The financials need to be prepared by your accountant and lodged with the Australian Taxation Office (ATO.) You also need to ensure your Business Activity Statements (BAS) are paid up-to-date. You should also have extra copies of all your BAS statements for the potential buyer.
Ideally, you would need to have available:
1) The year-to-date figures
2) The previous 3 years of profit and loss, plus balance sheets
3) Last 3 years of tax returns
4) A list of aged debtors
5) A detailed list of plant and equipment
6) A signed copy of lease on the premises
7) Your Australian Company Number (ACN) & Australian Business Number (ABN)
8) Add backs, worked out with an adjusted net
9) 12 months BAS statements
To better your chance of a sale, every month, you should update your year-to-date figures. Then, potential buyers can trust you with the latest on the business. If you are too busy or really unsure about this, your experienced business broker can guide you.
Asset Agents offers a free, no obligation business evaluation service. We can assist you in your business sale needs. To find out what your business is really worth, contact us at assetagents@gmail.com or phone 07 3103 5616.
