Selling your largest asset is a big thing. Please do it the right way and ensure you get the best possible return on your many years of sacrifice and hard work.
Read MoreSME Exit Strategies
Guiding Business Owners To That Multi Million $ Payday
About WCT Consulting
At WCT Consulting, we specialize in creating tailored exit strategies for SME business owners. We focus on businesses in the $6m to $20m+ revenue range. Our expert team is dedicated to guiding you through the entire process, ensuring a seamless transition that aligns with your goals and values. A service delivered by people who have successfully bought and sold their own businesses. If you are considering selling in the next 12-36 months, you are in the right place.
Case Study - 'Railco'
THE PROBLEM
'Railco' was a Telecomms, Civil and Rail Signalling Contractor. They lacked focus and realised they wanted to target high value Rail projects, a market segment experiencing dramatic growth.
PROJECT
'Railco' approached WCT for expert guidance on formulating an Exit Strategy. The owners knew they were onto somethng big, were confident thay could grab a good share of the market and wanted an expert to help them to successfully exit the business in 3 years time.
CONTEXT
While the Rail market had enormous upside the Directors knew that their competitors where mulit-nationals with very deep pockets. So they had to grab market share and exit before the headwinds started blowing.
OPTIONS
The Directors realised that Accountants were best at company structure and tax and Lawyers for legal stuff and it was too soon to approach a Business Broker or M+A Agency. So they chose option 3 = Get expert advice and guidance from people that have been through the same thing - many times before!
RESULTS
The business grew revenue from FY21 of $6.7m to FY24 $20m with a solid ROI. They hit their "trigger point" 3 years into their journey.
HOW
A strategic review undertaken by WCT identified weaknesses including shareholder disputes, key staff retention, Directors distracted from core business by "noise", a weak balance sheet that could not sustain targetted growth and lack of corporate governance.
OUTCOME
WCT addressed all weaknesses and matched 'Railco' with the right M+A Agency to handle their exit.
'Railco' was a Telecomms, Civil and Rail Signalling Contractor. They lacked focus and realised they wanted to target high value Rail projects, a market segment experiencing dramatic growth.
PROJECT
'Railco' approached WCT for expert guidance on formulating an Exit Strategy. The owners knew they were onto somethng big, were confident thay could grab a good share of the market and wanted an expert to help them to successfully exit the business in 3 years time.
CONTEXT
While the Rail market had enormous upside the Directors knew that their competitors where mulit-nationals with very deep pockets. So they had to grab market share and exit before the headwinds started blowing.
OPTIONS
The Directors realised that Accountants were best at company structure and tax and Lawyers for legal stuff and it was too soon to approach a Business Broker or M+A Agency. So they chose option 3 = Get expert advice and guidance from people that have been through the same thing - many times before!
RESULTS
The business grew revenue from FY21 of $6.7m to FY24 $20m with a solid ROI. They hit their "trigger point" 3 years into their journey.
HOW
A strategic review undertaken by WCT identified weaknesses including shareholder disputes, key staff retention, Directors distracted from core business by "noise", a weak balance sheet that could not sustain targetted growth and lack of corporate governance.
OUTCOME
WCT addressed all weaknesses and matched 'Railco' with the right M+A Agency to handle their exit.
Services
Discovery
The journey begins with a strategic review of all aspects of your business, employees, clients and competitors. Then we identify what needs to change, refresh, improve and make recommendations. Then we identifyExit Targets and research the multiples they are paying for businesses like yours and set a target value.
Execution
WCT acts as your Board Advisor on all aspects impacting your Exit Strategy. We are not Accountants or Lawyers, we are business owners that have successfully built and sold their own businesses and we proved real life experience. We add value in many areas including: finance, marketing, ESG, key staff retention, Director risk with our primary focus on maximising shareholder value.
Exit
We guide you through the entire journey , right up to settlement on what is likely to be the biggest payday of your business career. We cover Board meetings, exit strategy guidance and an experienced sounding board are at your disposal. When you hit your "trigger point" we then introduce you to the relevant M+A Team to handle the sale of your business.
Blog
Please do not rush this process, it needs to be done right, mistakes now will cost you hundreds of thousands or maybe millions of dollars depending on the value of your business.
Read More
Your business will sell for a PE (price earnings) multiple of your historical Ebitda (earnings before interest, tax, depreciation and amortisation). The faster your business profits are growing the higher the multiple.
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A DD can take anything from 4 to 12 months to complete. It is going to suck up plenty of man hours to prepare and then respond to all the questions that arise.
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F.A.Q's
What tax do I pay when selling my business?
The Australian Government provides a small business rollover relief for business owners. This means up to $6m you pay no tax. Above that amount you pay capital gains tax.
Always consult your Tax Accountant on tax matters.
Always consult your Tax Accountant on tax matters.
What is Goodwill?
This is largely the value of your customers and future revenue streams. It could also include domain names and registered trademarks and other IP (intellectual property).
What is Fair Market Value?
The value that similar businesses to yours have sold for in the past. This is typically based on a multiple of your historical Ebitda. (Profit before interest, tax, depreciation and amortisation)
Asset sale or Company sale?
Generally, you only sell the company (shares) if you have a “clean balance sheet”. The Purchaser wants to avoid any skeletons in your closet, so would need to be extremely comfortable in due diligence before buying the company. There are tax advantages to the Purchaser doing things this way, but they need to weigh up the risks. Selling the assets is the preferred option and the Purchaser then transfers them to his own company. A sale agreement generally contains indemnities covering the Purchasers risk if there is a share sale.
What happens to my Cash in the bank?
This would depend on what you are selling. If you are selling the shares in your business i.e. the company, then this would go to the purchaser. The balance sheet belongs to the company, not you personally. If you are selling the assets and goodwill, then typically you would keep the cash. Either way with most transactions, you would transfer the same amount of current assets (debtors, stock) to current liabilities (creditors, overdraft).
Cash free debt free is the best way to look at this.
Cash free debt free is the best way to look at this.
What do I tell my staff?
This is always a tricky situation as negotiations include site visits by the purchaser or their representatives. Generally this is explained as "investors looking at the business to assist with growth" or can be done on weekends or after hours.
Key staff must generally be brought into your confidence and we would recommend incentives for them linked to the sale in return for them staying on with new owners for a minimum of 12 months beyond the sale.
Key staff must generally be brought into your confidence and we would recommend incentives for them linked to the sale in return for them staying on with new owners for a minimum of 12 months beyond the sale.