Sale Negotiation and Agreement Structuring - CapitalQ

Sale Negotiation and Agreement Structuring

So you have done the hard work …

  • Your business is as ready as it will ever be
  • You know the tax consequences and
  • How you will minimise the tax impact, and
  • You now have an interested party who can see what you have built and want to take it off your hands …

But, one purchase price is not necessarily equal to another, even if the headline figures aren’t far apart.

Agreement terms can vary widely, and each one, even those that seem minor or innocuous at first, could have a big impact, including on the tax outcome! Examples include –

  • Your ongoing commitments to the purchaser
  • Your restraint of trade
  • The allocation of the purchase price between Stock, Plant and Goodwill
  • Any earn-out or delayed purchase price.

These are all examples of agreement terms, amongst many others, that can have a significant bearing on the commercial and personal success of a deal irrespective of the price on offer.

Don’t be fooled by the old “they are all just standard clauses” routine. Even if that is the case, it doesn’t necessarily mean you have to agree to them. Or at the least, you need to understand the commercial reality they bring.

Remember, while your business broker is certainly on your side looking to get you the maximum sale price, they only get paid when a sale goes through, so it may not always be in their best interests to advise you to push back and secure better terms. Plus they cannot legally advise you o the tax consequences of any agreement the put in front of you.

That’s just one reason why it so often pays to have a separate, totally independent, Adviser helping you to get the very best (overall) result.

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What our customers say

Logo for Michael Gray
Duncan Melbin’s firm first became the business accountants for Exploration Data Services, and my Family, when he was still a Graduate Accountant some 16 years ago. Myself and my late business partner have followed him ever since!

In the early days Duncan was very proactive in regards to fine tuning our business structure and the benefits of getting the structure right early are still flowing today.

Throughout my time working with Duncan he has played a key role in ensuring our tax affairs have always been in order and our tax obligations have always been minimised and well managed.

Duncan has also played a key role in ensuring my Family and I have adequate wealth protection in place and that we have maximised our wealth creation including through a regular superannuation contribution strategy and the use of a self-managed super fund that keeps us engaged, in control and to a large extent free from the perils of the GFC.

More recently we took the opportunity to outsource our entire back office accounting function to CapitalQ including switching our accounting and invoicing to Xero. I now spend barely any time at all on my monthly accounting and Activity Statement lodgements, as CapitalQ have it all in hand. This allows me to focus on running my business better, and frankly to have more time to enjoy the spoils of a life in business.

I work closely with Kapil Bhasin, our Client Manager, and Peter Melbin, our outsourced Bookkeeper, and they are clearly very valuable assets for CapitalQ.

Working with Duncan, Kapil and Peter is very easy, they respond promptly to any queries I have and most importantly I have complete trust in the advice they give me and that my business affairs are being well looked after. I would recommend CapitalQ to any potential client without reservation.

So if you own a small business or are looking to grow your wealth I highly recommend you speak to the CapitalQ Team. They will give you good advice, and ensure you are on track for a sound business and financial future (and outsourcing your back office accounting process to them, and switching to Xero, will be two of the best business decisions you will make).

Michael Gray

Director - Exploration Data Services (Perth)

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