F.A.Q's

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.

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).

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)

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.

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.

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.