For Frequently Asked Questions regarding Selling a Business, Buying a Business and How to improve my business before I sell it, find the following links:
- FAQ’s for Selling my Business
- FAQ’s for Buying a Business
- FAQ’s for improving your Business before you are Selling
More FAQ…
Q: Do you work independently or are you a part of a wider network?
A: Mike is a part of LINK Northland as an Independent Contractor. The advantage to this is that, as a local business broker he is readily available at short notice with the advantage of having a wide network of brokers, national and international.
LINK Business Broking is a New Zealand company, started in Auckland in 1996. We currently have offices in Australia, the United States and the Philippines. Our systems are internationally connected and we can share our listings with our brokers worldwide by pushing one button.
The views expressed on this website are the views of Mike as an experienced Business Broker. They are not necessarily the views of Kakapo Business Sales or of other brokers working for Kakapo.
Q: What are your fees?
A: For any consultation (and you may need more than a couple before you decide to list your business) we would never charge a fee. We can help with general advice (also if you sell privately) at no cost.
Unlike most business brokers, we don’t charge an admin fee, we don’t charge for advertising* and we don’t charge disbursement fees for cost incurred in the sales process. These costs are NOT charged before or after the business has sold. You will only pay our success fee after we have sold the business for you.
For a successful sale we charge 8% (+gst) of the total value on the Sale & Purchase Agreement, with a minimum fee of $15,000 (+gst). This includes all the costs mentioned above (admin, advertising* & disbursement fees)
*The only advertising that could incur a charge (at cost price) is additional advertising such as Video Production for social media (typically ranging from $1000 +gst for a simple interview video, up to $3000+GST for footage including aerial drone footage) and printed advertising in industry specific magazines.
Q: What is my business worth?
A: Most often the value of your business depends on your performance and how the business would continue after the sale. It is a wider picture of different aspects such as the remaining length of your lease, asset value, cashflow, location, how well you do compared to your competition and also the current state of the economy. The long and short of it is that good businesses generally sell in any type of economy.
As a Business Broker I have access to comparable businesses that have recently sold so we can appraise your business and establish an appropriate price that reflect the performance of your business in the current market conditions.
Q: Is now a good time to sell?
A: Especially as during the last 5 years people have been waiting for the GFC to wear off and then sell. The truth is that in good times also, there are businesses going under. It is also industry dependent whether your business is performing.
My view is that there is never a bad time to sell providing you are realistic about the price and serious about selling. With the baby-boomers being a large slice of current business owners there is a chance the market would get flooded with average businesses for sale when all of them decide to take their business all to market. This might make it hard for a good business to stand out. As in any market the sales of businesses is guided through supply & demand. This potentially could have an impact on the price you will get for your business in the future.
The best time to sell your business is when the business is doing well. If you wait until the business is declining or you have an urgent need to sell, the purchase price will suffer. It is important to remember that almost any business can be sold, even if it is not currently doing well. In that case it is important if the sale is handled by a professional intermediary and is priced accordingly.
The best time to sell your business is when the business is doing well. If you wait until the business is declining or you have an urgent need to sell, the purchase price will suffer. It is important to remember that almost any business can be sold, even if it is not currently doing well. In that case it is important if the sale is handled by a professional intermediary and is priced accordingly.
Q: I want to sell my business ASAP so I want to list it with as many agencies as possible. Why should I give you sole agency?
A: It is important that you know why most Business Brokers ONLY work with Sole Agency Agreements.
The obvious reason is to maintain control of Confidentiality and possible breaches. I can guarantee I will not disclose your information but if other parties are involved I can not be held accountable for any breaches.
The second reason is a self explanatory reason that we spend a lot of time in doing research, writing an Information Memorandum, targeting potential buyers & following up with enquiries, meeting interested parties and offering Real Estate services only qualified individuals are allowed to do. A Business Broker could spend all this time for absolutely no money when a General Agency is in place.
The third reason is for your protection; to achieve the best possible price we need to have control of the sale process.
Q: How long will it take to sell my business?
A: On average a business would be on the market anywhere from 4 to 8 months. In some cases longer, depending on the industry. This varies depending on the 3 P’s; Price, How well your business is Presentation & how well the business is Promoted.
Q: Do you already have buyers for a business like mine?
A: LINK has an extensive database of over 18,000 registered buyers. These people have indicated that they are interested in buying a business and have given LINK permission to communicate any updates to them.
This is very powerful as now we don’t have to rely on people visiting the likes of TradeMe or reading newspapers. They are here and now, waiting for a phone call.
Q: Why can’t I sell my own business?
A: You CAN!…. but… Most owners that try to sell their own business find that the time they waste following up on interested parties and qualifying potential buyers is not worth the money saved trying to sell your own business. It is nearly impossible to maintain confidentiality while selling your own business.
To obtain maximum value for your company, you need to concentrate on running your business to keep your business profitable. If you are spending too much time working with buyers, you will start neglecting your business and if profits decrease. This will be reflected in your purchase price.
Q: How long is your Agency Agreement for – Do I have to pay you anything if you are unsuccessful in selling my business?
A: We will only work on the basis of a Sole Agency agreement. It is an ongoing agreement without expiry date, that can be cancelled after 90 days (with 30-day notice) from the date we make the listing live on our website.
We ask for a 12 month comitment, as some businesses just take longer than others. Obviously if you are in a hurry to sell your business we make it our business to do so. Secondly, no you are not obligated to pay us anything if we are unsuccessful in selling your business except from any marketing fees that have been agreed.
Q: Do you help with negotiations?
A: Yes, our brokers work with you, the Vendor and assist you with any necessary negotiations. We will handle the entire sale and liaise with you and the buyer and your respective solicitors until the deal is completed, potentially saving you money in legal fees.
Q: Who needs to know I am selling?
A: You should inform your accountant of your intentions to sell and seek advice as to any likely tax issues resulting from the sale. This is particularly important if the business is a limited company. You should also inform any party that has a vested interest in the business.
In most cases we would advice not to tell your staff. It can be unsettling and cause unnecessary friction in the sales process. We can discuss the best approach.
Q: Do I have to accept an offer?
A: No, it’s entirely up to you whether you accept an offer. We will give a positive or negative advice with pro’s and con’s, assisting you in making a decision to accept, decline or counter-sign the offer.
Q: What will drive the goodwill value of the business?
A: Some of the items driving the goodwill include:
- Demand vs supply
- Consistency of profits
- Growth potential
- Multiple revenue streams
- Market strength
- Barriers to entry
- Owner dependency
- People and skills
- DESIRABILITY!