Tell me about the sale of your small business

Discussion in 'Small Business' started by Biz, 9th Sep, 2016.

Join Australia's most dynamic and respected property investment community
  1. Biz

    Biz Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    2,235
    Location:
    Sydney
    Divulge as much or as little as you like.

    - Started with X sold for Y
    - Started with X and sold at a loss for Y :(
    - Sold privately or through an agent?
    - How you settled on a price? profit x etc
    - Did you get a lot of tire kickers?

    Anything and everything...
     
    DaveyB, MTR and Colin Rice like this.
  2. geoffw

    geoffw Moderator Staff Member

    Joined:
    15th Jun, 2015
    Posts:
    3,695
    Location:
    Canberra
  3. Ace in the Hole

    Ace in the Hole Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    2,132
    Location:
    Sydney
    - Started with 12k and sold for Multiple million.
    - Sold privately or through an agent? - Agent
    - How you settled on a price? Multiple ebit as a general guide.
    - Did you get a lot of tire kickers? No, agent qualified buyers to not waste everybody's time.

    Just over a decade of hard work done, settle 3pm tomorrow.


    You selling up too Mr Biz?
     
    Finrod, Lizzie, Ted Varrick and 21 others like this.
  4. Xenia

    Xenia Best Adelaide Property Manager Business Member

    Joined:
    21st Jun, 2015
    Posts:
    3,537
    Location:
    507 South Rd ASHFORD SA.
    Wow you are a champ
    I have never sold a business but I'm in awe of what you've done here.
    Congratulations
     
  5. Ace in the Hole

    Ace in the Hole Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    2,132
    Location:
    Sydney
    Thank you Xenia.
    Before starting the sales process, it was quite overwhelming bringing something you've created which is a bit disorderly and messy, and packaging it all up to present to the market.
    Just had to grind it out and take it step by step.
    Our sales agent did a good job throughout the whole process, and our accountant also helped massively.
    Business coaching also played a big part early on and again in the final years prior to presenting to the market.
     
    charttv, Chabs, Gockie and 2 others like this.
  6. Biz

    Biz Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    2,235
    Location:
    Sydney
    Not yet mate, aiming to sell up in around 5 years or so. Just kicking the idea around a bit.

    Well done to you A, have enjoyed your story and many thanks for the advice years ago. A real inspiration! Enjoy your break starting tomorrow afternoon. :)
     
  7. Ace in the Hole

    Ace in the Hole Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    2,132
    Location:
    Sydney
    Thanks Biz.
    Did we discuss Temando one time back in the Somersoft days 2 or 3 years ago?

    Time flies, allow maybe 12 months before you think of wanting to sell to prepare everything for a sale.
    These things take time.
    You may get a good offer straight up, but all the prior preparation is what takes the time and also the settlement may drag out too with due diligence, etc.
    I wanted to be out by 40, but now it will be a week prior to my 42nd.

    Break for me won't start for at least 6 months until handover period is complete, but I will taper off during this period.
    Then I may stay on in an advisory role which will only require a very small amount of time from me.
     
    ellejay and kierank like this.
  8. kierank

    kierank Well-Known Member

    Joined:
    20th Jan, 2016
    Posts:
    2,671
    Location:
    Brisbane
    Isn't CGT payable on this?

    What strategies did you employ to minimise tax payable?
     
  9. Ace in the Hole

    Ace in the Hole Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    2,132
    Location:
    Sydney
    CGT is certainly payable in this case because we started with practically zero costs.
    We'll be up for almost an even mil in tax and costs.

    We have quite an experienced and creative account and looked at many options to minimise the tax, but to cash out in one lump sum, some tax is unavoidable.
    Will likely contribute just over a mil into SMSF.

    Can't complain too much about the tax payable, even though it hurts.
    The biz was holding a lot of cash for a long time, and helped accumulate and fund a large property portfolio this whole time.
    Helped self fund a 6 townhouse development in Brisbane too, which was good to not have to get bank funding.
    Once all done our property portfolio will be at an extremely low LVR.
     
    The Y-man, kierank and Propagate like this.
  10. kierank

    kierank Well-Known Member

    Joined:
    20th Jan, 2016
    Posts:
    2,671
    Location:
    Brisbane
    We were lucky when we sold our business. We owned it for 15+ years, we were both 55+ when we sold, ...

    So we were able to roll our sale proceeds over into our SMSF and paid basically nil CGT.

    Years later, the Government limits tax-free Super balances to $1.6M :) :).
     
    Gockie likes this.
  11. Gockie

    Gockie Be the change you want to see in the world Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    8,322
    Location:
    Sydney
    I read someone had an active farm for 15 years, on sale they could halve their CGT for being a small business and halve it again for being an active asset then they were able to put half the proceeds into super... so they got the same outcome as you... no CGT.
     
  12. kierank

    kierank Well-Known Member

    Joined:
    20th Jan, 2016
    Posts:
    2,671
    Location:
    Brisbane
    That is exactly what we did. From memory, it is called Small Business CGT Exemption. There are a lot of criteria that one must meet but it is worth it.

    Saved us millions :) :).
     
    Gockie likes this.
  13. geoffw

    geoffw Moderator Staff Member

    Joined:
    15th Jun, 2015
    Posts:
    3,695
    Location:
    Canberra
    The 55+ thing certainly saved us a lot. Yet our accountant didn't raise it- something on Somersoft prompted me to ask.

    One gotcha. That level of income in a single year will trigger student loan payback, if you have any. I was in the very unusual situation of being over 55 with student loans, as I went back to study.
     
    charttv and kierank like this.
  14. Chabs

    Chabs Well-Known Member

    Joined:
    24th Jun, 2015
    Posts:
    308
    Location:
    Sydney
    Congrats and well done Ace in Hole, I have a few questions:

    Multiple ebit means a multiple of monthly earnings before tax?

    Would love to know where you got business coaching? What you said about having a messy business and trying to package it to sell is so damn relatable.. I am trying to turn a SUPER messy business into a smooth operating one that can replicate its business model (retail store) and I can own the real estate for each store, a la Mcdonalds :)

    The journey is super challenging and everything is easier said than done of course.. but at least its funding investments, similar to you!
     
  15. Ace in the Hole

    Ace in the Hole Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    2,132
    Location:
    Sydney
    Thanks @Chabs

    EBIT stands for earnings before interest and tax.
    Our business coach was a local guy, sole operator.

    I found that maintaining a business once it got going was quite easy. The difficult part was growing it and continuing to grow it.
    Every step up pushes your comfort zone, you then adapt, and then push again.
    What really drained me in the final years was knowing that we would exit sometime in near future, so I always felt pressured to keep the business growing and performing to its maximum value. It would have been so easy to just sit back and relax and make some easy money, but I don't feel comfortable doing less than my best.
    It's a vicious cycle.
    Getting this over the line was the hardest thing I've done in my life.

    Settled today :)
     
    mitsui, Ted Varrick, ellejay and 7 others like this.
  16. Gockie

    Gockie Be the change you want to see in the world Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    8,322
    Location:
    Sydney
    Whoo hoo!!! Huge congrats Ace!!!
     
  17. Ace in the Hole

    Ace in the Hole Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    2,132
    Location:
    Sydney
    Thanks Gock,
    Feel a little relieved, but will still be working as hard as ever during the hand over period and will not slack off.
    At least the hard parts done and I can just work now, without having to do all the extra stuff.
     
  18. BuyersAgent

    BuyersAgent Well-Known Member Business Member

    Joined:
    19th Jun, 2015
    Posts:
    551
    Location:
    Oz
    This is so good. Thanks for sharing Ace.
     
    Ace Ventura and Luke T like this.