The decision to buy or sell a business is often a momentous one; it can be part of an overall strategy or forced by changes in your personal circumstances. Typically, business sales are caused by retirement, illness, a desire for change or financial reasons, and the decision to buy a business might be related to a desire to become more independent, utilise financial assets or have control over your finances. While you can sell your business independently, it usually pays to use a LINK broker to sell or buy your accommodation business.
Selling Your Business
You’ve put a lot of money into your business, and it’s vital that you get a good return on income. For many companies, the overall value of the business is directly related to how much money it makes. The actual modifier used depends on the industry, but for smaller motels and hotels, an average return is around $3.50 to $5.00 for every dollar of profit it makes. Other businesses vary substantially, and large businesses are often valued based on their return on investment.
That’s a big range. A business with $100,000 of annual profit could make $350,000 to $500,000 when sold, and a LINK broker can have a serious effect on the price. While there are commissions, these are often offset by the time savings and the amount of money that you get at the end of a broker-assisted deal.
Using a LINK broker ensures you can carry on running your business throughout the process rather than having to stop everything and market your business for sale. This keeps your bottom line high, even if you don’t sell the business for six months. Similarly, you can get an adequate valuation and advice on how to maximise the value of your business.
A lot of businesses rely on a certain amount of operational secrecy, and a broker allows you to keep the sale reasonably discreet. This means that other businesses cannot temporarily undercut you in order to undermine the sale or otherwise take advantage of the sale.
LINK also maintains a database of interested buyers, and access to this database is a key benefit of using a LINK broker. It ensures that your business is listed and that potential buyers can be notified without having to search for you. The average business sale takes between six months and two years, although this includes global businesses that have to undergo regulatory approval. A LINK broker may be able to help speed up this process through the use of the database.
LINK brokers can also help you understand what paperwork is needed so that you can push through the sale of your business to the right person and for the right price.
Buying a Business
Putting your name in our database lets us match your needs to the right business. LINK makes the process smooth and hassle-free, whether you are a seasoned buyer or looking for your first business. It doesn’t cost anything to register with LINK, and there is no charge to you when buying the business — the cost is borne by the seller.
A LINK broker ensures that you remain advised throughout the business process and can provide advice on your needs and your expectations. This can be extremely valuable, as you will always have a helping hand guiding you through the buying process. While it’s up to you to do your due diligence on each business, a LINK broker can help you find professionals who help advise you on matters of accounting or legal issues.
Overall, a LINK broker ensures that both sides are represented fairly and provide support throughout the entire buying and selling process. LINK’s success as a market leading business brokerage is based a unique approach to facilitation and a focus on delivering exceptional service. LINK’s success comes from our unique, tailored service. When you want to buy or sell a business in New Zealand, trust a LINK broker to help you.
Lindsay Sandes
LINK Auckland, Ellerslie
lindsay.sandes@linkbusiness.co.nz
021 895 940
