Legal Brief with Alan Tate of Harris Tate www.harristate.co.nz

As baby boomers reach retirement age, many of them are looking to sell the businesses that they have built up over their working careers.

What they are finding is that there is often not the ready market for their business that they thought there might be and in some cases, no-one is interested at all.

The result is that they often sell their business for much less than they thought they would get or simply walk away from it.

In either case, the funds they thought they would have for their retirement are substantially less than they had bargained on.

Often the problem is not that the business is not capable of earning a profit, but the way that it is presented for sale makes it unattractive to purchasers.

There can be many reasons for this. For example the owner might not have his main customers signed up to contracts, but has instead relied on his personal connection with them built up over the years to ensure ongoing work. When the owner goes, a purchaser has no confidence that the main customers will stay with the business. Arrangements with key staff might have been on the same basis, with the same result. The accounts may not be tidy, the business systems and equipment may have been allowed to get out of date.

Technology may have left it behind or there could be a number of other things that individually may not make much difference to the value of the business, but could collectively make a prospective purchaser walk away.

All of those things are fixable, but they take time to put right. The message is that it can take two to three years to get a business ready for sale. Anyone considering selling their business should get to work on it sooner rather than later with the help of their lawyer, their accountant and a real estate agent or business broker.

Harris Tate and WHK Accountants recently ran a seminar that provided practical tools for business succession planning. Participants were given advice on how a well-planned exit strategy helps to maximise business value and simplifies the sale process.

Anyone who missed the seminar but would like more information should contact Grant Harris at Harris Tate on direct dial 571 3666 for a no-obligation discussion.