Often when business proprietors are approaching their 50s they are already giving some thought to business succession issues.
This may take different guises. If you have younger shareholders or the potential to bring in employees as shareholders, this may offer you an exit strategy that can be implemented over time.
However, if you are not in that situation, you may be either looking at a sale of business or sale of shares in the next few years.
If you are looking at a sale in the next few years, it pays to start giving some thought to getting your house in order from a due diligence perspective and obtaining tax advice on the small business capital gains tax concessions that may be available to you.
At the point that you are sale ready and have concluded an in-principle terms sheet with a buyer, the buyer will instruct its accountant and lawyer to conduct due diligence on the business, and if it involves, a sale of shares, the company itself.
Generally speaking the ‘cleaner’ the operation of the business and the company is, the less issues will be identified in due diligence and the smoother the sale process will be.
If there are areas of risk that are of concern to a buyer then this can play out in a couple of ways: