Category Archives: Maximising Value

How to Overcome a Crisis Event During a Business Sale – Video

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If the financial performance of a business is temporarily impacted by a crisis event, unless the true underlying performance can be presented, the business sale may not achieve fair value until the crisis event has worked its way into history in the financial results.

In this video, we explain how to make extraordinary normalisation adjustments to help overcome a crisis event, while maintaining the integrity of the business presentation during the business sale.

If you found this video helpful, we’d appreciate a share or a thumbs up! Be sure to check out our complete ‘How to Sell a Business’ series for plenty of other tips and strategies for improving the outcome of your business sale process.

Increase business sale value using put & call options – Video

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In situations where outgoing owners are going to keep a share of their business, we look at how to increase business sale value using put and call options.

When selling a business, a business owner may have the opportunity to retain a share of their business as a way to achieve a higher overall sale price.

In a recent video we covered how business owners who agree to retain a share of their businesses on sale can increase business sale value by lowering the purchaser’s risk.

In these situations, Put and Call Options are an essential part of the process and in this video we’ll run you through what you’ll need to know about them and explain how each should be structured.

Maximize business sale value with performance based earnouts – Video

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Requiring all your money up front doesn’t always get you the best overall outcome when selling your business. To maximize the outcome, it often helps to agree to a performance based earnout.

Many business sale transactions are structured with earnout provisions, particularly in the mid-size business market. There are many reasons why building in an earnout structure might be mutually beneficial.

In this video we’ll explain what an earnout is and run through the 5 main benefits of having an earnout structure as well as 5 potential downsides you should consider.

Apportioning the sale price

Apportioning the sale price

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In any business sale transaction tax implications are a critical consideration. One of the key factors in determining after-tax outcomes can often be the apportionment of sale price to individual assets.

In most cases the vendor wants to minimise the allocation to stock, depreciable assets and non-concessional CGT assets, while the purchaser wants the opposite.

It may be in both their interests that the consideration not be allocated on the contract, and instead allocated independently. From an Income Tax perspective, the allocations need not agree unless the assets are sold to a related party.

Each party should allocate a reasonable amount to each asset (ie. fair market values). Where the allocation is not reasonable, market value substitution rules and/or Part IV-A of the Tax Act may be applied to the transaction.

In some States, Stamp Duty applies to different components of the consideration at differing rates eg Victoria, where (as of this writing) Goodwill and intellectual property are not dutiable property. This may make it necessary for the parties to agree on apportionment of the sale price.

Practices vary from State to State. In Queensland, there is no price apportionment on most business sale contracts.

Purchasers and vendors should always consult their tax advisers before signing a contract.