Maximising Value in a Business Sale

In today’s dynamic market, timing and executing your business sale strategically can maximise your value to position you strongly for your next venture.

Despite recent economic headwinds, Australia’s M&A landscape shows remarkable resilience, with promising indicators for business owners considering their exit options. While FY24 has seen a modest 13% decrease in M&A transactions, market confidence remains strong. Australia’s M&A environment commands an impressive 77% confidence score according to a report from Mergermarket dealmakers, while Deloitte’s latest CFO Sentiment Report reveals that 45% of CFOs maintain an optimistic outlook on the financial prospects of their businesses.

The timing might be opportune if you’re planning for retirement, seeking new ventures, or looking to capitalise on current market conditions. The mid-market segment continues to attract significant interest, offering compelling opportunities for business owners ready to transition their enterprises to the next chapter.

Your Exit Strategy: More Than Just Numbers

While maximising sale price is crucial, successful exits must balance multiple objectives.

Immediate priorities typically centre on optimising the total sale price and securing favourable payment terms. Tax implications must be carefully considered, and many business owners place high importance on protecting their legacy. Looking further ahead, employee welfare post-transaction is often a key concern, alongside ensuring business continuity and growth.

Many owners also weigh the possibility of ongoing involvement and seek buyers whose vision aligns with their own values. Striking the right balance among these factors creates the foundation for a successful transaction.

Understanding Your Options and Priorities

Each business sale option offers distinct advantages depending on your priorities. A trade sale often commands premium valuations through synergy potential and typically provides more upfront cash. This path particularly suits owners seeking a clean break from their business.

A company sale (or share sale) provides a similar clean break for sellers and is often favoured by sellers looking to access CGT discounts and buyers who place value on maintaining the assets and authorities within the target company. In a company sale, employees, leases and assets do not have to be transferred.

Private equity partnerships offer a different approach, allowing you to retain an equity stake while gaining access to growth capital and expertise. This option works well for businesses with strong management teams who can drive the next phase of growth.

An equity sell-down or joint venture provides a balanced approach to risk and reward. This structure allows for continued strategic influence and enables a more gradual transition, which some owners find appealing.

For larger enterprises, an Initial Public Offering (IPO) might be appropriate. This route provides market-based valuation and enhanced access to capital, though it requires a robust governance framework and meeting onerous compliance obligations for public companies.

Maximising Value: The Process Matters

A successful business sale typically unfolds over 6-12 months through several key stages. The journey begins with thorough preparation, including reviewing financial and corporate information, preparing an information memorandum, and conducting market research. Solid foundation proves essential for attracting optimal valuations.

A targeted strategy is then developed to approach potential buyers while maintaining strict confidentiality. As interested parties emerge, preliminary discussions lead to detailed proposals. The subsequent due diligence phase is crucial and often makes or breaks a deal, focusing on financial, legal, compliance, tax, and commercial aspects of the business and the transaction being contemplated.

Final negotiations require careful attention to both commercial and legal details. Proactive issue management and maintaining transaction momentum significantly improves completion rates. Throughout this journey, your trusted advisors help anticipate challenges and guide strategic decisions to achieve your objectives.

Tax Considerations: Protecting Your Proceeds

The structure of your sale can significantly impact after-tax proceeds. Capital Gains Tax concessions may offer substantial benefits, with potential 50% discounts available for individuals and trusts. GST treatment varies based on transaction structure, while duty implications differ by jurisdiction and deal type. Meticulous tax planning often yields substantial benefits.

Expert Guidance When It Matters Most

We understand that selling your business represents the culmination of years of hard work. We support our clients throughout the journey, from strategic planning and valuation guidance through transaction structuring and documentation. Our Corporate Team works with you and your accountants to determine your commercial and strategic objectives and provides support and focus on achieving tax-efficient outcomes.

Ready to Explore Your Options?

Please contact our Corporate & Commercial team for a no-obligation, confidential conversation to discuss your business exit plans.