Exit Options When a Business Won’t Sell

For many small to medium business owners, selling the business is the long-awaited reward for years of hard work – a clean exit, a financial boost, and a well-earned next chapter. But in practice, not every business is saleable. Whether due to low profitability, reliance on the owner, or broader market conditions, some businesses simply don’t attract buyers.

For owners in this position, especially those already under pressure, this realisation can be both confronting and overwhelming. That’s where timely advice from trusted professionals can help reshape the path forward.

We worked with a client, let’s call her Mary, who operated a café in a popular weekend tourist destination on the Gold Coast. The business had been in the family for more than two decades. Around ten years ago, Mary took over the business from her mum and still owed her some money from the purchase. The business was run through a corporate entity.

Mary’s husband, Bill, was unemployed, so the business needed to cover the family’s weekly living expenses. On top of this, Mary’s mum continued working part-time in the café, and Mary felt obliged to pay her an above-market wage to maintain her accustomed income. While the business performed reasonably well, it couldn’t sustain the high level of family drawings, leading to growing arrears, particularly with statutory debts.

When de Jonge Read® became involved, the financial position of the business was as follows:

In addition, there were two years remaining on the premises lease, and Mary had personally guaranteed the lease payments, leaving her exposed to those obligations.

Fortunately, all BAS lodgements were up to date, meaning Mary was not at risk of personal liability under a lockdown Director’s Penalty Notice (DPN). It’s important to note that one of the simplest ways to protect directors from a lockdown DPN is to ensure BAS are made within 90 days of the due date, even if payment cannot be made.

After years of stress and long hours, Mary was ready to walk away. She engaged a business broker to sell the café and initially listed it for $275,000, enough to repay all debts and cover the broker’s commission. However, the broker expressed concern that this price was unrealistic. While the business was turning a profit, it didn’t justify such a valuation, especially considering Mary’s essential role in its day-to-day operations.

The café remained on the market for several months with no meaningful interest, and the debt position continued to worsen.

The business broker, aware of the situation and options beyond a traditional sale, referred Mary to de Jonge Read® to explore her options. The broker also advised that a quick sale could likely be achieved for around $140,000.

de Jonge Read® developed a tailored strategy based on this realistic sale price. The plan involved proceeding with the sale, prioritising certain creditor payments, and then finalising the company’s affairs via a creditors’ voluntary liquidation (CVL).

A buyer was quickly found at the $140,000 price point. The sale proceeds were applied as follows:

• Business broker commission: $18,000
• Staff superannuation: $20,000
• Trade creditors: $10,000
• Rent arrears: $13,000

This left a balance of $79,000, which was not sufficient to pay the remaining debts, totalling $200,000.

Technically, the rent payment may have been deemed preferential by a liquidator. However, paying this amount was necessary to assign the lease to the purchaser, without which the sale would have fallen through. In scenarios like this, liquidators often choose not to pursue such claims, and that was the outcome here.

A fixed fee of $13,000 was negotiated with the liquidator, which was important to Mary as she wanted to maximise the return to creditors, including her mum. After covering the liquidator’s fee, a dividend of approximately 30 cents in the dollar was paid to unsecured creditors.

This strategy allowed Mary to:

• Move on from the business without being burdened by the personally guaranteed lease obligations
• Secure a maximum return of $15,000 to her mum
• Finalise her company’s affairs and alleviate ongoing stress

If it weren’t for the business broker recognising that alternatives to a traditional sale existed and referring Mary to de Jonge Read®, she may have continued under the false assumption that only a $275,000 sale would allow her to exit. Left unchecked, this could have led to mounting debts, creditor-driven wind-up proceedings and potential personal exposure due to unpaid superannuation and lease guarantees.

With expert support from de Jonge Read®, Mary was able to exit the business in a structured and sensible way, protecting her personal position and achieving the best possible outcome for her family and creditors.

When a client’s business is no longer viable or simply not saleable, your guidance can be pivotal. Here’s how you can help:

• Encourage early conversations
  Early action gives clients the broadest range of options. Delays often lead to a narrowing of choices and increased financial exposure.
• Support a realistic assessment
  Help clients understand the true position of their business, free from emotion or false hope, so that informed decisions can be made.
• Frame alternatives constructively
  Liquidation or restructuring may feel like a loss to the client, but reframing these options as financially responsible and future-focused helps them move forward.
• Bring de Jonge Read® into the conversation early
  We work alongside you to develop and implement the right strategy for your client, relieving you of the need to manage complex insolvency issues alone.

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Not all businesses will sell, but every business owner deserves a clear and manageable path forward. When the sale they hoped for is out of reach, your guidance and a timely referral to de Jonge Read® can help them avoid escalating pressure and protect what matters most.