Welcome to the second edition of the Sierra Series, where we take a closer look at Things to Consider When Selling Your Business.

Selling a business is a major milestone - and preparation is critical. In this three-part series, we guide you through the key stages of the process:

• Part 1: Develop Your Strategy
• Part 2: Get Your House in Order
• Part 3: Understand the Transaction Process

Our first edition, Unfair Contract Terms Under the Microscope, examined the types of clauses that commonly breach the ACL’s unfair contracts regime and outlined practical steps for compliance.  If you missed it, you can catch up here.

‍

Why strategy matters

It’s never too early to start thinking about your exit strategy. A well-considered approach can maximise value, reduce risk and make the sale process smoother for everyone involved.

Key elements to consider include:  

1. Define your goals and deal breakers

Start by being clear on what you want to achieve from the sale. Ask yourself:

• What do you want to achieve from the sale (e.g., financial security, succession planning, freeing up time)?
• What are your non-negotiables or ‘deal breakers’ (e.g., minimum price, treatment of staff, timing, and whether and to what extent you are prepared to commit to assisting the buyer with the transition of the business after completion of the sale)?

Having clear objectives and deal breakers will guide negotiations and help you assess whether a prospective buyer is the right fit.

‍

2. Understand sale structures

Choosing the right sale structure is a foundational decision. The most common structures are:

• Asset sale: The sale (by the business entity) of all of the assets of, and business conducted by, the business entity.
• Share sale: The sale (by the shareholders) of some or all of the issued shares in the company that conducts the business.

Each structure carries different tax, legal and commercial implications. Buyers often prefer share sales for continuity and ease of transition, while sellers may find a sale of shares to be more tax-efficient.  Conversely, asset sales can offer buyers greater protection from inherited liabilities, making them a lower risk option in certain circumstances. Early advice is critical to determine the most appropriate structure for your situation.

‍

3. Get tax advice early

Tax planning should be addressed at the outset. Early advice can help identify the optimal sale structure and whether any pre-sale restructuring is required to improve tax outcomes.

Leaving tax planning too late can result in missed concessions or unnecessary tax liabilities.

‍

4. Identify your likely buyer

Consider who your most likely buyer may be - whether a business partner, employee, competitor or third party. This will inform your sale strategy and whether you should engage a business broker or corporate adviser to identify and approach potential buyers.

Failing to think through this early can waste time and limit your options.

‍

5. Obtain a valuation

A professional valuation helps set realistic expectations and provides an objective basis for pricing discussions. It also takes into account market conditions that may affect value.

Unrealistic pricing, particularly where no valuation has been obtained, is a common reason negotiations stall or fail.

‍

6. Build your support team

Selling a business is complex and requires the right advisers. In addition to a tax adviser, you will typically require support from an accountant, a lawyer and key internal stakeholders.

Engaging an experienced legal team early can help with structuring, due diligence preparation and negotiations. At Sierra Legal, we regularly assist business owners through each stage of the sale process.

‍

7. Understand the transaction process

Finally, it is important to understand how a transaction typically unfolds - from early discussions through to completion. This helps you plan timelines, manage expectations and allocate resources effectively.

We will explore the transaction process in detail in Part 3 of this series - stay tuned.

‍

Client success story

Selling a business is often the most significant transaction of an owner’s career. Having the right legal team can make all the difference - not only in managing risk, but in providing you confidence throughout the process.

"Mike Jeffery and the team at Sierra Legal assisted us with all legal aspects of the sale of Maple Plan to NIB – from the initial preliminary discussions, right through to structuring, negotiating, and completing the transaction. We always felt as though Mike “had our backs” (in the most important deal in our careers so far) and we would have no reservations about recommending Sierra Legal to anyone else planning on selling their business."

— Vincent Lay and Andrian Putra, founders and former owners of Maple Plan

‍

What’s next?

A strong strategy is only the starting point. The next step is making sure your business is ready for buyer scrutiny. Even the best plans can falter if records, contracts and structures are not in order.

In Part 2, we’ll step through how to get your house in order for due diligence - so you can present your business confidently and keep the transaction moving.

‍