A business's value involves assessing various factors such as financial performance, industry trends, market conditions, assets, liabilities, and goodwill. This is where your accountant is essential. An experienced accountant will be able to help you to accurately assess the value of your business.

You may need to prepare several legal documents for the sale.

If you are providing sensitive commercial information to a purchaser, such as customer and supplier lists it is important that a confidentiality agreement, also known as a nondisclosure agreement or NDA is signed. If a purchaser wishes to make an offer to purchase, they may issue a letter of intent or proposed heads of agreement which the seller might accept or negotiate.

The next document is the contract of sale. A purchaser might skip a letter of offer or heads of agreement and go straight to the contract of sale for the business if one has been prepared. Once a contract of sale for the business is signed, other agreements to complete might be an assignment of lease or other items of plant and equipment and transfers of business and domain names.

Under a standard business sale agreement, once you have sold, you will not be liable for anything the new owner does with the business. However, you can be liable for the past conduct of the business. To protect yourself from past conduct, ideally provisions limiting liability should be included in the purchase agreement, such as representations, warranties, and indemnification clauses. These provisions can specify the scope of your liability and the buyer's responsibility for future claims or disputes. On the other side, the buyer will want to minimise liability for matters prior to their purchase. So, it is a negotiation.

Often a buyer will want a seller to assist in the transition of the business. How long you wish to stay involved in the business after the sale is negatable. Typically, a seller will help at no charge for a short period. If the buyer wants the seller to stay longer, you can negotiate terms that allow you to remain as a consultant, advisor, or employee. This arrangement can be addressed in the purchase agreement, specifying the nature and extent of your involvement or, alternatively in a separate employment or consultancy agreement.

Selling a business can have significant tax implications, including GST, capital gains and income tax. Most of these potential tax liabilities can be reduced or eliminated if the sale contract is carefully prepared. Your solicitor working in conjunction with your accountant can help minimise your potential tax liability.

A potential purchaser will want to conduct a due diligence process. Typically, this will involve you disclosing all relevant information about the business. Depending on the business, a purchaser will want to focus on financial records, significant contracts, customer and supplier relationships, intellectual property, and potential or existing legal disputes. Where the business sale price is less than $450,000, section 52 of the Estate Agents Act 1980 requires a seller to provide a statement that sets out the business's financial performance over the last two years. Your accountant prepares the section 52.

Selling only part of your business, such as specific assets, a division, or a subsidiary, is possible. In this situation, careful attention needs to be paid to ensuring no liability remains with the part of the business which has not been sold. Also there can be implications for GST and tax liabilities, which are different to the position with a sale of the whole business.

The process for transferring licenses and permits will depend on the type of licence or permit. If a government body has issued the licence or authority, then the government body will have a process to follow. The trap here can be how long it takes. Therefore, looking at each licence and permit is important to understand the time frame needed. With important contracts, the other party to the contract may need to consent to the transfer.

To protect confidential information during the sale process, typically, a confidentiality agreement, also known as a nondisclosure document, must be entered into with potential buyers. It may also be that access to sensitive information is restricted. For example, the information cannot be copied.

This is when you negotiate that the purchase price is paid by instalments. Sometimes a terms contract is necessary to sell the business. However, it is not the preferred option. This is because the purchaser will be relying on the business's cash flow to make the payments. If the purchaser is not good at running the business or there are difficult economic times the purchaser may run into cash flow problems.

The short answer is yes, whilst it is the obligation of the purchaser to conduct their own due diligence, pending legal disputes or liabilities can create problems in the future for the seller. Failure to disclose this information may raise allegations the buyer was misled.

This will depend on the type of business and whether there are permits or licences required to conduct the business. For example, with the purchase of a licenced restaurant the liquor licence needs to be transferred. Licences and permits are not only important to take into account but also, they are important ascertaining the time it takes to comply with those regulations. Also, there may need to be an assessment as to whether the purchaser will be eligible to hold the necessary permits or licences.

The typical period is 60 days from the date of signing the contract until completion. However, this can vary depending on the complexity of the business and the number of contracts and or licences that need to be transferred. As for the pre-contractual phase it isn't easy to give any general time frames it will depend on the type of business and the demand.

Breaching the terms of the contract of sale should be avoided at all costs. A breach will inevitably have consequences typically, a purchaser will have the right to terminate the contract for breach and sue for damages. The contract will generally have a process to follow in the event of a breach.

It is important to consider which employees may be essential for the new owner to retain. The best strategy is discussing these issues with the buyer and the employees. If an employee is crucial to the ongoing success of the business, then consideration should be given to matters such as employee retention incentives, and non-compete agreements. The aim from a seller's point of view is to minimise disruption and maintain business continuity.