Keeping your business in a saleable condition heading into EOFY

Here are a few points to consider that will help your business stay in a saleable condition as we head into end of financial year.  

* Stock.  These values are commonly discussed at this time of year however have you considered how the ageing of your stock may impact business value?  Business buyers don’t want to take on old stock. Typically, any stock over 12 months old is considered obsolete so it may be best to sell the older stock at reduced prices to ensure stock is rotating. 

* Plant & Equipment values.  I often speak with potential sellers that think the plant and equipment values in their business are the same as their depreciation schedules.  As a business owner you should be aware of what your current secondhand values of plant and equipment values are.  This is critical information required to be able to appraise a business value. 

* Private Expenses.  Whilst every business owner may be tempted to try to expense private items to reduce tax, it needs to be made clear that this devalues the business.  Obviously, the lower profits in the business reduces the overall value of the business.  It also makes the business less appealing.  I would discourage any business owner from trying to expense private items as it’s detrimental to the business value.  

* Jobkeeper Payments.  I believe there are some business owners that are holding off on considering a sale because they want to take advantage of Jobkeeper payments.  The length of a sale process should be considered, typically it takes 14 months to sell a business.  By the time a sale is achieved Jobkeeper payments will be well and truly over so there is no reason to delay listing the business for sale. 

I would also like to share with you that I am currently seeing increased buyer enquiry.  There seems to be a lot of people looking to buy businesses so please rest assured that there are some very genuine buyers out there.  There seems to be a lot of people that have been employed (and subsequently lost their jobs through COVID-19) that are now looking to buy a business. 

If you have any questions in relation to the above, please don’t hesitate to give me a call.