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Selling a house vs selling a family business

The family business is the greatest financial asset owned by the family and starting a divestment process can be quite daunting...

26 July, 2022
Governance, Article
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Family Businesses can have very differing levels of experience when it comes to selling, though most have never sold a business before, as it is the first and only business they will sell in their lifetime.

The family business is the greatest financial asset owned by the family and starting a divestment process can be quite daunting. It is the culmination of decades of work and yet the owners are completely in the dark as to what happens in a sale process.

An initial meeting is beneficial to explain how a sales process is conducted, by comparing the process of selling a business to that of selling a house. Most people understand the process of selling a house, but there are many differences:

Starting a divestment process

House: An individual receives quotes and proposals from local real estate agents and appoint their preferred agent.

Business: Business owners will also receive proposals from corporate advisors but relative to a real estate agent, the proposal is far more comprehensive and customised, the fees are higher, the experience of different advisors can vary greatly, and often the advisor is not local to the area of the business.

Preparing for sale

House: An agent may recommend some minor actions to improve the value of a home. Paint the fence, clear the gutters etc.

Business: Advisors will also provide recommendations to improve value. In the short term they are usually focused on management team depth, customer contracts and financial systems. However, painting the fence is also important for a business! When buyers visit your business, first impressions matter.

Marketing a house/business

House: An agent puts up a listing on REA and Domain, physical billboards and flyer are also created. Agents respond to buyer enquiries. The marketing process ultimately culminates in an auction.

Business: A comprehensive Information Memorandum (“IM”) is created to provide potential buyers with sufficient information to value the business. An IM is typically 50 – 100 pages long and takes ~6 weeks to create. The marketing process is discrete and only mutually agreed strategic parties are directly approached by the advisor. The sale is not publicly advertised, and the marketing process culminates in the submission of Non-Binding Indicative Offers (“NBIO”) on a pre-determined date.

Offers and valuation

House: The market for properties is deep and you can always sell a house. The price difference between using the best and worst agent in town might be 10% at auction. An agent will also be able to give you a good guide to value based on recent comparable sales in the area.

Business: Buyer interest for a business can vary greatly. Some businesses will be aggressively pursued by many buyers, other businesses may be completely unsaleable even if they generate a good profit. Whilst an experienced advisor will give a fair indication of value prior to starting a process, businesses are far less homogeneous than houses and could be worth vastly different amounts to different buyers. A recent example is where the highest bidder’s value was 6x the value of the lowest bid! Due this, an advisor can have a much greater impact on value when selling business, relative to a real estate agent when selling a property.

Due diligence   

House: Relatively simple, check the zoning, planning permits, structural and pest inspections can usually be done in 1-2 days.

Business: Usually takes 4 – 6 weeks and focuses on financial, legal, employment and commercial matters. The buyer will typically use 2 – 3 different teams of experts to complete their diligence.


House: Relatively standard form Sale of Land contract with some minor customisations to the specific property. Negotiations will typically only include minor markups to the document.

Business: Can be either a Share Sale Agreement or Asset Sale Agreement. These documents are highly customised to the individual business. Negotiations are significant and include numerous markups to the agreement.


House: Two months marketing, sign contract on day of auction, settle in 30 – 90 days

Business: 4 – 6 weeks preparation, 4 – 6 weeks marketing, 4 – 6 weeks due diligence, 2 – 4 weeks final negotiations, settlement usually ~30 days from signing contractual agreements.

Resourcing and effort

House: An agent will typically spend 40 – 80 hours to complete a sale start to finish. There is a small amount of additional stress to the Vendors, but typically selling a house will not interfere with your day-to-day life.

Business: An advisor will typically spend 800 – 2000 hours over 6 – 9 months to complete a business sale process. The Vendor’s time commitment during the process will fluctuate. However, it is highly likely that there will be a significant increase in workload and stress levels during due diligence and negotiations.

Written by Paul Nemets

Paul Nemets, Nash Advisory

This article was submitted by FBA (Family Business Australia) Advisor, Paul Nemets, Associate Director of Nash Advisory a boutique corporate advisory firm based in Melbourne which specialises in selling privately owned businesses in the Australian mid-market space. They work with businesses that are between $10m and $200m in value.


The views expressed in this content are those of the author, who is also responsible for any errors and omissions. Family Business Australia and New Zealand provides this article for your information only. The content of the article should not be taken as advice. If you wish to explore this topic, please consult an advisor who you consider to have the expertise to provide specific advice in relation to your family business.