New Year New Business. By Tina Zawila.

By Tina Zawila

It may have been the holiday season, but behind the scenes there was a lot happening in Gladstone’s business economy in December and January.  At Sothertons we have been working with entrepreneurs who are starting their dream business, sellers who are moving on to new challenges or pastures, and buyers who are looking for an opportunity to be the master of their own destiny. 

Whether you are the buyer, or the seller, there’s usually a lot to learn regarding the purchase/sale process, and how to make sure you get the best possible outcome.  

Here are two things you should know:

One of the critical pieces of information in a business sale is the trading history of the business.  Usually this is presented in an “Abridged Profit and Loss Statement”, which essentially is a modified financial report showing several years of income and expenses, after adjustments have been made for items that were unique to the owner (such as the owner’s salary and motor vehicle etc).  This report usually helps to support the seller’s asking price, demonstrating to a potential purchaser that the business will provide a return on their investment.  This report should be prepared and signed by a qualified accountant.

The second important concept is the “due diligence” process.  This is where the potential purchaser has time (usually after the contract is signed) to do their own evaluation of the business to verify that the information they were provided during negotiations is accurate and to satisfy themselves that they are prepared to proceed to settlement. 

As your accountant and business advisor we are here to help in this process.  We can prepare the financial report if you are the seller, or we can review the report that has been supplied to you if you are the buyer.  We can assist you as the buyer to ask the right questions during due diligence, and as the seller we can help you provide the information to the buyer.

A business is usually a big investment of your time and money – don’t try to buy or sell on your own.  Call our experienced and professional team at Sothertons Gladstone on 4972 1300.