Get an exit plan now - start as you intend to finish

Many self-employed business owners will rely on the sale of their businesses to fund their retirement. In many instances they have no (or very limited superannuation) at the time of sale.

The tricky part for these people is:

  • Who to sell to?
  • At what price?
  • How to sell?
  • When to sell?

The most common advice I give to a business owner and have tried to apply myself is “Start as you intend to finish”.

Let me relate the most common scenario I regularly encounter:

“Great to hear that you will fund your retirement from the sale of your business. How much do you want to have to live on in retirement?” 

“$100,000 per annum, at least.”

“How much will your business sell for?” 

“$5 million, at least?”

“What makes you think that that is what your business can be sold for? Have you ever had your business valued?”

So often I hear “I have never had my business valued but I am sure that is what the business is worth.” 

In answer to “Who will you sell your business to?” I often hear “I am not sure, I have some ideas but haven’t committed anything to paper yet.”

And to “How will you sell your business?” I get “I sort of really haven’t thought that right through yet.”

They have a strongly held belief as to the value of the business. Rather, we stress that the accountant advisor to the business owner has a valuable role to play as an independent set of eyes. He must encourage the business owner, who is very busy working in the business, to make the time to adequately consider what is a critical issue.

Given that the retirement lifestyle of the client is at stake, this sale transaction needs to be effectively executed.

The transaction will take preparation time – mentally, financially and operationally. This time helps to focus the seller in tidying the business, thinking through what creates value in the business, reducing key person dependence within the business and ensuring that they are able to communicate to a potential buyer how the business creates value independent of them as the owner.

What you want as a client is:

  • Early preparation
  • Annual valuation of your business
  • Documented plan to create value in the business
  • Written outline as to potential exit options
  • Advisors who understand how a business can be sold
  • Advisors who can look after the tax and legal issues

Maximising the value of a business sale takes preparation, time, understanding of valuation and a clear strategy. The pay-off is substantial


Ask yourself:

  • How much do you want to live on in retirement?
  • How much will you sell your business for?
  • What makes you think your business has been valued accurately?
  • Who will you sell your business to?
  • How will you sell your business?
  • Does your accountant have any valuation expertise that you know of? 
  • Is your business valued annually? 

Ask accountant:

  • Have you ever bought or sold a business or businesses?
  • Can you advise me on what needs to happen to get me ready, ahead of time, to deal with these key succession and wealth management issues?
  • What would be the process of preparing the business for sale?

This article was taken from the book 'Your Money, Your Choice', written by Brett Kelly. For more information on Brett, please visit his website: