6 EASY STEPS TO SELLING A BUSINESS
STEP 4 – THE OFFER
Once the Buyer is satisfied after physically examining your business and analysing the financial statements, they may want to negotiate certain issues before making a formal offer. Think about the following before you start negotiating:
- Negotiation terms: what do you want?
- Anticipate compromise: what will you compromise on?
- Your walk away position: when will you stop negotiating and walk away?
- Buyer’s offer will be to buy the business:
- For a certain price
- On a certain date
- Subject to:
- Finance being approved by their bank
- Their accountant doing due diligence and being satisfied with the profitability
- Their legal advisor doing due diligence and being satisfied with the terms and conditions of the premises lease (and also the franchise terms – if the business happens to be a franchise)
- All government licenses held by the business being transferred to the Buyer
- Satisfaction with the staffing arrangements and staff transition to their stewardship
- Satisfactory assistance from you as the outgoing owner as they learn the business operations
- Written assurance from you as the outgoing owner regarding a competitive restraint period
- Any other pre-conditions appropriate to the business such as environmental issues, supplier contract assignments, product warranties etc.
The GMO Broker will present their offer to you and you may either decide to accept or to make a counter-offer. GMO will attempt to mediate on issues of contention such as price, with the aim of achieving the highest possible price for you whilst reaching consensus and acceptance between you and the Buyer.
Once agreement is reached between Buyer and Seller the business is then officially “under offer”.
The Buyer’s deposit is paid into the GMO trust account and due diligence will then commence. GMO will help you and the Buyer tick off “all the boxes” and undertake due diligence and progress towards settlement.
THE “AGREEMENT TO PURCHASE A BUSINESS”
A Contract of Sale for a business acquisition is a serious document requiring expertise of professionals to ensure your wishes are precisely transcribed into the agreement.
In Western Australia business brokers are legally empowered to help you and the Buyer in the preparation of an Offer and Acceptance Agreement.
Working in co-operation with your accountants and solicitors, we can utilise the 12-page Real Estate Institute of WA Business Sales Agreement documentation.
Our role is to then provide the expertise that facilitates negotiations and brings a finalisation of the sale.
Your alterations, counter proposals and price adjustments will be put to paper meticulously in the REIWA contract form (a form established by REIWA’s solicitors to be as mutually beneficial as possible – for protecting the interests of both Buyer and Seller).
Your counter offer will be prepared and presented to reflect your conditions and instructions. Once you are satisfied with how your counter offer is presented, it will then be relayed to the Buyer. Having put thousands of business agreements to bed, the development of satisfactory Contracts of Sale is a feature of GMO’s service that we take great pride in.
Our track record in document preparation is exemplary.
AN IMPORTANT DISCLOSURE:
While GMO is happy to assist prospective Buyers in purchasing a business, it should be remembered that we act for the Seller and our remuneration is paid by the Seller.
Therefore, we strive for the best possible transaction for the Seller whilst still endeavouring to treat the Buyer in a fair and respectful manner.