Private Treaty: is where you list the business for sale under contract with a Business Broker and they find the buyer. They negotiate terms and conditions relating to the sale from your instructions, between yourself and the Purchaser. Sometimes sale contracts contain special conditions that require resolution prior to settlement and completion. Your Broker will monitor progress and keep solicitors up to date. For this you will pay a reputable broker between 5.0 and 6.0% of the sale price including stock (most brokers) at valuation on settlement day. Stock is valued at invoice price + freight; and not retail. Other professional broker fees would include disbursements for the cost of advertising which is usually paid on appointment. Any unused funds from advertising is returned upon completion of the sale. A specialist business broker in your local community is always a better choice than a real estate salesperson.

Generally, residential salespeople mean well, but have little experience regarding procedure and protocol. Selling a house basically requires a council rates notice, building and pest inspection report, (optional) and the contract. Selling a business includes employment details, work place health & safety, ratified statements of declaration and compliance, schedules of plant & equipment, fixtures & fittings, hire & service agreements, lease details and much much more. A land or residential salesperson's floundering will usually cost you time and money with mediocre results. This is not a bag out, and I speak with respect of course. It's each to their own, nothing more. But over the years I have been witness to a multitude of stressful poor results especially for the vendor, whether they were aware of it or not. 

So, to avoid the potential of loss and disappointment, make sure you always ask how long your broker has been selling businesses, and make sure you get them to name other businesses they personally have sold. A professional broker will expect you to contact those businesses named to learn how the broker has performed in the past. Remember, your business is your life, it has supported and fed you, and you don't want the sale ruined because of inexperience. You may think a good business broker will know how to charge you, but you can expect in relation to market, premium  results for their fees.

Public Auction 

We personally do not like public auction, purely because of the perception the market invokes, really without basis. Usually peoples assumptions are based on past events. A potential buyer knows that it's not often a quality business is seen for auction. If its a well known business that's sold, the first time they hear about it is when the business is advertising under new management. When I have asked buyers their thoughts on a particular business being auctioned at a time when they are searching for themselves, they have responded with, "Oh but that's not much of a business is it?"  and because that has been such a common reply we believe the perception of "quick fire sale" impacts on future patronage in the short term.  It would be a rare set of circumstances that would prompt us to recommend auction. 

But be mindful, marketing a business without a price sometimes [very rare] brings more than you have expected. Also auction contracts are unconditional contracts. Because of that very single risk factor for the buyer; prices are usually lower. A successful auction is moderately expensive and usually the costs are similar to the private treaty mode.

An experienced broker can avoid the "quick fire sale perception" by organizing multiple businesses to be auctioned on the same day. The auction is held at a neutral venue or the broker's office. Advertising lead-up to the auction should be around 6 weeks. Prior offers should be the starting point for bidding, and for the benefit of those vendors sharing costs, no businesses should be withdrawn from sale prior to auction day. To be successful we found the optimum number of businesses to run at a multiple auction was six, and it has to be very carefully coordinated. However,

The problem with public auction is everybody and anybody can collect every bit of information available about your business, including your personal tax records. It's surprising how people will do anything for information if they are in competition to you near or within your catchment area. Believe me I've seen it all, then on auction day they don't even turn up to bid, and we all know why. If your business doesn't sell at auction the highest bidder has the right to negotiate further; after the completion of the auction. They usually know the level of interest shown on auction day and will make their offer accordingly, if its declined then public offers are called again. Often genuine buyers will not bid deliberately, because they know every time they open their mouth or raise their hand it is more money out of their own pocket. After all, its being astute isn't it? Why bid at all, if they can negotiate later at a token price. We have never recommended a business auction, and usually only auction businesses under instructions from liquidators or financiers. 

Public Tender 

Usually used for larger type businesses, commercial properties and large tracts of land, successful in that area as well. Most auction or tendered businesses and commercial properties sell within 45 days following the close, or auction date. Often for a reduced amount. Resourceful bargain hunters are often the purchasers. During all of the years I was broking I would always have preferred to have public tenders, but the success rate for businesses was always disappointing, and again just like auction, everybody gets all of your information, and that includes your banking and tax return details. Public Tenders seem to work with large commercial properties, and developers keep a keen eye for them in the tender columns of the classifieds. But tendered business sales have never gained success in relation to asking price and sale. Costs are similar to auction and private treaty, usually between 5.0 and 6.0 % of sale price, including sav. plus advertising.

Private Sales 

Vendors that attempt to market their business themselves, do so for only one reason. To save agents fees and commissions. Unfortunately, buyers that buy from private vendors, simply do so for only one reason. To save commission. The same commission the vendor is trying to save. Which one do you think saves money? Every purchaser of a private sale mentally deducts the amount of commission before they even consider negotiation. Therefore, without professional advice and guidance, not surprisingly private vendors position themselves with a huge disadvantage and usually much time passes before a sale is completed.

Often it will be passed to a marketing agent when ineffective advertising has already done damage to perception, and any potential existing buyers that have been monitoring progress would consider the business "Stale". If a business is for sale and it is hammered week after week for a considerable time, it will be perceived as "There must be something wrong with it". If you are going to obtain the highest price available from the marketplace be sure to get professional marketing advice.

Professional advice doesn't mean you must have an agent acting on your behalf. It means; what's important to you may not be important to a prospective buyer. It's very important to you if you have designed a particular product or system or method, and it's likely you would make it a feature of your business, but a buyer doesn't really care, and it would have a negative impact especially if spare parts of home designed equipment are not available in the future. Admittedly, product knowledge sells, and nobody knows your business better than you. But you have to find a genuine somebody to tell your knowledge to, and good brokers usually have databases of unsatisfied prospects they have spoken to in the past. 

Many buyers don't like to negotiate directly to the vendor for fear of insulting or upsetting them. You see, buying a business is nothing personal. It's about market place and values. What must happen is that your business has to be more attractive than all of the other businesses on the market in your area and price range. Also consider this; before you can sell a business you have to sell the area or city which the business is in. It would be difficult for a broker to convince me, that say Bundaberg or Auckland was the best place to live if they lived in Sydney. You should always try to engage somebody local to your business, or a specialist city based firm that specifically deals in exactly your category. They are what we call "Master" Brokers. They are usually found in major cities that often represent franchise chains, eg motel brokers or national brand retailers. Often master franchisee's have short lists of people that have enquired to buy, that for one reason or another are still looking. It's an area you should conduct extensive research. Speak to other businesses recently sold in your area, or category and listen to what the purchasers have to say. But don't go to market unprepared.

If you are going to sell your business yourself, then your initial presentation will include photo's of your business. We have seen some terrible presentations over the years, so to help you get the best from your business description we have included a guide that makes a point of what and why. Photo Guide Pdf. 38Kb. Remember, don't go to market unprepared.