Selling your business due to mounting debts? Not all is lost! cover image

Selling your business due to mounting debts? Not all is lost!



Many small and medium sized businesses experience regular cashflow problems. It is more common than you may think and it becomes a balancing act, or a poorly choreographed juggling attempt.

A clear head is the number one ingredient, not yours, your thinking is hampered by stress.

You need someone that offers substantial business experience and sound advice. Don’t look at the usual suspects for support. No job can match the business experience you gain in the insolvency sector. Financial Crisis is what we deal with and learn from with every new case.

As an insolvency consultant, I see first-hand what can go wrong. I also often get to learn what would have made a difference, but by now it is too late. This is frustrating, knowing so much of financial pain could be eased or avoided altogether.

Not all insolvency consultants focus on helping clients avoid insolvency. A1 Debt Assistance does, as I lost my chain of retail stores during the Keating recession. I now help others avoid my mistakes.

You need to expand your horizons.

 There are a multitude of reasons for your business to experience challenges. Often these are not obvious until the business undergoes a due diligence process.

Don’t have your first due diligence as part of the sale of your business. This is likely to turn into the purchaser being able to walk away from the deal.

Run your own check, or get help. Address the issues and establish which ones you can fix and which ones you can’t fix. How would this situation look under a new ownership? Can we turn weakness into strength?

Is it your personal debt that is dragging down the business? There are solutions and under some circumstances you may be able to go bankrupt and still operate your business. Freeing up cashflow.

Be honest when you sell

After losing my small chain of 5 retail stores, I ended up in Commercial Real Estate – selling businesses. I was shocked when going through the listings. Many business listings, with substantial asking prices had no more than junk value. The prices reflect the owners financial needs to get out, not the value of the business.

Don’t let your business become such a listing. I started to help struggling business owners who had nothing to sell, to turn things around and stay in business or finally be able to sell.

Buyers need to know if it’s a basket case and the asking price needs to reflect this. This does not stop you from selling, it stops you from cheating. Don’t ruin someone else in the process.

The No-Go zone. Basket Case and over-priced.

 The figures must stack up so the buyer can borrow against the business.  A cash buyer is rare. Whenever it seems’ a buyer is ready, the accountant or the bank manager will pull the plug.

Due diligence is there for a reason. I never understood why agents would even run with shonky listings. Fix them first and you actually have something to sell.

What are your options?

 At A1 Debt Assistance we receive calls from business owners ready to enter into some form of insolvency.

Often, we help them avoid this. We approach it similar to a due diligence process. Our motivation is to detect the main culprit causing your business problems and develop remedies.

A purchaser does not have the same overheads than the current seller. This relates to existing car loans, business loans, over drafts etc – all such figures are called add backs. Running through this process will tell you if you have a business that could be viable to a particular purchaser. It also will determine your asking price.

For tax reasons we are encouraged to make business purchases on finance and use the finance costs as write downs. Unfortunately, when the turn over drops, your repayments remain. The tax saving is now killing your business.

There are insolvency options that may actually help you, whilst still being able to keep your business.

How does this help you to sell your business?

People generalise things and overlook the detail. To establish your best sales options for a difficult business, get someone that has the skill to look at the detail. Numbers tell a story, they don’t just add up. Get professional help to decipher the story for your business.

Different buyers have different reasons to purchase a business.

 Your business may have major flaws, but someone does put value to certain parts. This could be your data base, or a contract that is not viable under your structure. It could well be managed effectively by a larger player. Your store could be in an ideal location, just not for your type of business. Sell the lease to the right business or chain.

Once you understand the true selling points, you get a better understanding of who the likely buyer is. Don’t let them know they are your last hope! Now you can create your hit list of targeted buyers.

You have approached a competitor and they are interested. Trust me, they will find out how tough it is for you. Their approach will likely be the waiting game. They are not paying, they just wait for you to close the doors and they are on the phone to the landlord – taking over your goodwill for nothing.

Why advertising the sale of your business is so important?

To avoid the above scenario. Your buyer should fear they could miss out. You could be dealing with multiple buyers. This will give you a much greater chance to sell your business and get the best possible price under the circumstances. Create the balance of supply and demand.


If you need help with your business – feel free to contact me via email [email protected] or visit my website