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Selling a Business in Australia
Problem 1: Get Ready to Sell
To increase the chance of selling your business within the desired timeframe and at the price you want, you need to get it ready for sale. Generally, the sooner you start getting ready, the better.
Solution
Business sales readiness.
Outcome
An attractive business for prospective buyers.
Read Key Points & Transcript
Getting Ready to Sell a Business in Australia
video key points
- Preparing your business for sale involves implementing efficient systems and processes to ensure smooth management transitions.
- Clear and accurate financial records are essential, free from tax distortions or personal expenses.
- Obtaining an objective market valuation and creating compelling financial projections with benchmarking can enhance your business’s appeal to buyers.
- Building a list of potential buyers and engaging experienced advisors, such as reputable business brokers, is crucial for a successful sale.
- Investing in professional profit improvement and strategic growth programmes can significantly increase your business’s profitability and value.
- Start preparing three to five years before the intended sale to make necessary improvements and position your business attractively.
- Consider a free introductory meeting or using the Selling a Business Diagnostic on our website for further assistance.
Presented by: Carl Hansen
video transcript
To increase the chance of selling your business within your desired timeframe and at the price you want, you need to get it ready for sale.
The sooner you get started, the better.
The following are some of the things you may need to do:
- Implement systems and processes that allow the business to run efficiently under new management.
- Ensure your financial records are clear and accurate, free from distortions caused by tax strategies or personal expenses.
- Obtain an objective market valuation.
- Create financial projections with benchmarking to present a compelling story of future success.
- Start building a list of potential buyers and engage high-quality advisors, such as reputable business brokers.
- Invest in improving your business’s profitability and value through professional profit improvement and strategic growth programmes.
- Prepare a thorough due diligence pack and address any potential buyer objections.
Ideally, begin these preparations three to five years before you intend to sell. This timeframe allows you to make necessary improvements and position your business as an attractive acquisition.
Should you need assistance, we’re here to help. A free Get To Know Each Other meeting is an excellent starting point. You might also find our Selling a Business Diagnostic on our website useful.
We look forward to supporting you in achieving a successful sale.
Problem 2: Business Valuation
There isn’t just one way to value a business. Ultimately, what you want as the seller is a business valuation which is realistically achievable and prepared in such a way that will effectively help the buyer agree to paying it.
Solution
Realistic business valuation.
Outcome
Increased chance of selling the business at a fair price.
Read Key Points & Transcript
SME Business Valuation in Australia
video key points
- Understanding your business’s value is essential before contemplating a sale, and while valuation methods vary, it’s crucial to choose one that aligns with your business’s unique attributes.
- Different valuation methods focus on factors such as discounted cash flow, EBIT or asset value, and the choice of method can greatly affect the valuation outcome.
- Industry-specific multiples can guide valuation, but they should be adjusted for your business’s specific characteristics like risk profile, customer base and growth prospects.
- Crafting a compelling story that justifies the business value is vital in securing a realistic sales price.
- To increase your business’s value, consider implementing profit improvement and strategic growth programmes.
- For further guidance, start with our spam-free Selling a Business Diagnostic on our website to get tailored insights and prepare effectively for a successful sale.
Presented by: Saul Segal
video transcript
What is your business worth?
It’s a question every business owner contemplating sale should have an answer to.
Valuing a business isn’t straightforward, but, it doesn’t have to be overly complex.
There are several methods that could be used to value a business.
Some valuation methods focus on discounted cash flow, others on EBIT or post-tax profit, and some on asset value.
Often, a “multiple” is used. A slight change in the multiple can lead to significantly different valuations.
It’s crucial to understand what is being multiplied. For example, in some industries, it’s common to use a multiple of 2-3 times EBIT, while in others, a multiple of around 1 times revenue is typical.
However, just because a multiple is commonly used in an industry doesn’t mean it should be adopted for your business. Unique attributes such as your business’s risk profile, customer base, growth prospects, or the broader economic conditions might justify a different multiple or method.
Ultimately, valuing a business is about finding a realistic sales price. For owners looking to sell, it’s most importantly about crafting a compelling story that justifies that value.
Notably, there are steps owners and managers can take to increase their business’s value. See our video “Get Ready to Sell” for a short list, with profit improvement and strategic growth programmes being particularly important initiatives.
At Munro’s, we employ a variety of methods to help our clients value their business and prepare it for sale. If help like this interests you, then we suggest starting with our spam-free Selling a Business Diagnostic, accessible on our website.
Thereafter, come meet with us, and we can work together to help achieve your goals.
We look forward to helping you soon.
Problem 3: Save Tax with the Small Business CGT Concessions
There may be very valuable tax concessions available if you satisfy certain criteria. This includes the possibility of an extra 50% CGT discount plus a part or full tax exemption. Forward planning is advised given things may need adjusting the year, or several years, before selling.
Solution
Forward tax planning.
Outcome
Bare minimum tax.
Read Key Points & Transcript
Saving Tax When Selling
video key points
- Smart and proactive tax strategies, implemented well in advance, can significantly reduce or even eliminate capital gains tax upon selling your business, allowing you to retain more of your hard-earned wealth.
- Utilising legal tax measures such as the Small Business Rollover and Retirement Exemption can result in substantial savings, particularly for those over 55, enabling full access to sale proceeds without the need for superannuation contribution.
- The introduction of a “bucket company” can spread and reduce taxes over several years, offering the opportunity to reinvest initial savings into wealth-accumulating assets like blue-chip shares.
- Forward planning, ideally a couple or more years before selling, is crucial to identify and implement the most effective tax strategies tailored to your unique situation.
- Preparation is key to ensuring a tax-efficient transition of your business, whether it’s being sold or passed to the next generation, and seeking professional guidance early can facilitate this process.
Presented by: Rama Yudhistira
video transcript
When it comes to selling your business, you want to make sure that you keep as much of your hard-earned wealth in your wallet.
Here at Munro’s, we are proud to have successfully saved our clients hundreds of thousands of dollars in taxes using smart and proactive tax strategies. We’ve done this through legal measures, to ensure that our clients can sleep peacefully at night.
Here’s an example of what’s possible.
In this example, our hypothetical client is selling their business, including business premises. Normally, this would trigger significant capital gains tax. However, through comprehensive research and analysis, we are able to help our client utilise both the Small Business Rollover and Retirement Exemption to reduce the capital gain tax down to NIL.
This is the perfect strategy for our hypothetical client since it also allowed them to access all of the sale proceeds because they’re over the age of 55 years, meaning they don’t need to deposit the sale proceeds to their superannuation account.
As another example, we might have a client selling their business who could benefit from the use of a “bucket company”. How so? By spreading out the taxes on the business sale over many years.
This not only delays some of the taxes, but also reduces them too.
In this example, the benefit to our hypothetical client could include their ability to use the initial savings to make investments in blue-chip shares, which then grow in value and allow them to accumulate more wealth.
Smart and proactive tax strategies are not limited to what we have just shared with you. The most important thing for you to understand is that often, to save tax, you need to be proactive.
A couple or more years before selling, you should instigate forward planning. This can allow sufficient time to identify the best strategies for your unique circumstances, as well as sufficient time to implement changes, if necessary, a couple or more years before sale.
So, if you have a business, naturally at some stage it will be sold or handed down to the next generation, and to achieve this in a tax effective manner we highly recommend you prepare in advance. Please feel free to reach out, we would love to help you.
Problem 4: What Next
As you approach selling your business and possibly coming into a large cash lump sum, you’ll need to consider how to set this up in a tax effective and financially prudent manner.
Solution
Retirement tax planning.
Outcome
Tax effective retirement.
Read Key Points & Transcript
What Next
video key points
- Retirement planning necessitates a focus on tax efficiency, especially during the sale of a business, aiming to minimise taxes both immediately and over the long term.
- A common strategy involves enhancing superannuation wealth, leveraging concessional and non-concessional contribution limits, and utilising special limits and the downsizer contribution limit, to benefit from lower or nil tax rates on superannuation earnings.
- Munro’s collaborates with clients and their financial advisors to craft a holistic retirement plan that meets income, wealth, and tax objectives, while also facilitating connections with trusted financial advisors for clients in need.
- The firm supports tax-effective estate planning, including the creation of a tax-effective Will, Enduring Power of Attorney, and Enduring Power of Guardianship, and advises on asset transfer to the next generation for benefits such as mitigating disputed estates, increasing capital assets’ tax cost base, and accessing Centrelink benefits.
- We act as a sounding board and trusted advisor, prioritising clients’ best interests and offering to embark on an incredible journey with those seeking an advisor that truly cares.
Presented by: Rama Yudhistira
video transcript
Planning for retirement is an important task that requires careful consideration and preparation.
A part of that planning, and eventual implementation, should be a focus on making things tax effective.
When you sell your business, not only do you want to minimise taxes during sale, you want to minimse taxes over the long-term.
For instance, if the sale results in a large cash lump sum, you want the income you generate from that over the forthcoming years to be taxed as least as possible.
A common strategy to mitigate taxes in retirement is to build up wealth in your superannuation account. This is because the tax rate on superannuation earnings may be nil or at a rate lower than your ordinary tax rate.
In the years leading up to retirement, your plan may include maximising both your concessional and non-concessional contribution limits. Around the time of sale of your business, if eligible, your plan may also include maximising special concessional limits. Later you might also utilise the downsizer contribution limit.
Ultimately, tax professionals such as ourselves can work with you in the lead up to, and during retirement, to effectively save you tax.
At Munro’s, we don’t provide investment advice, but rather work alongside you and your financial advisor to help with an holistic retirement plan that both achieves your income and wealth objectives, together with your tax objectives.
Where clients don’t yet have a financial advisor, we are able to introduce them to financial advisors we trust to do the right thing.
We also proudly assisted our clients with tax effective estate planning, which can include the outputs of:
- A tax effective Will;
- An Enduring Power of Attorney; and
- An Enduring Power of Guardianship.
During such conversations we also assist clients with considering whether any of their assets should be transferred to the next generation while they are still alive.
There are a few reasons why you might want to consider doing this, including:
- Mitigating the consequences of a potentially disputed Estate;
- Potentially increase the tax cost base of your capital assets; and
- Wanting to access Centrelink benefits.
While we leave the legal and financial advice to the experts, we will always be there as a sounding board – always truly looking out for your best interests as your Trusted Advisor.
If you would like an advisor that truly cares, we would love to hear from you and begin an incredible journey together.
Are you ready to sell your business?
Take the spam-free* Selling a Business Diagnostic.
* You’ll receive only two emails, which deliver the results, analysis and recommendations from the diagnostic. You won’t be added to our mailing list unless you explicitly opt-in.
Top 2% ranked Australian Accounting Firm
Don’t just take our word for it. Read more testimonials and see the impact we’ve made.
Read Key Points & Transcript
video key points
- Top 2% ranked Australian Accounting Firm is based on two separate Munro’s assessments of Google reviews for Australian based accounting firms on 9-10 August 2023 and 1 December 2023.
- Both assessments found Munro’s to be in the Top 2% (position 66 out of 4,235 and position 44 out of 4,301 for the assessments, respectively) when a ranking was derived from a comparison of the total of each accounting firm’s overall star rating multiplied by each firm’s quantity of reviews as shown on Google Maps.
- If the assessment was to be conducted today, then it is likely that Munro’s ranking would have changed – Munro’s may or may not be in the Top 2% today.
Presented by: Drew Pflaum
video transcript
In December 2023, we conducted a review of Australian accounting firms on Google Maps, based on star rating and quantity of reviews.
Out of the 4,301 Australian accounting firms we identified on Google, Munro’s ranked number 44, placing us in the Top 2% of Australian Accounting Firms. We’re thrilled to share this fact with you and share those reviews on our website. We’d also like to thank all our clients who left us those wonderful reviews.
Thank you.
Mike assisted with our farm succession planning. Thanks to Mike’s in depth knowledge on this subject, this process has been smooth and amicable. We highly recommend Mike and his team for family business succession.
We wish to thank Mike & his team @ Munros for their professional help & service over the past 20 years . Having just recently sold our franchise business after 14 years, Mike has guided us through those times with success & helped us to achieve our family goals within our business. Congratulations on your 50th Anniversary. Looking forward to continue to work with Mike & the team in the near future.
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- Email Us ExperienceSuccess@munros.com.au
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Perth WA 6000