Small Business Restructuring (SBR) is designed to help a business that can recover to continue operating. In contrast, selling the business provides an exit strategy for owners who no longer wish to continue or where recovery is unlikely. The right option depends on the business’s financial position, future prospects, and the owner’s long-term goals.
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On This Page
- Introduction
- Key Differences
- When SBR May Be Better
- When Selling May Be Better
- Business sale on or during SBR
- Next Steps
- FAQs
Introduction
Every business owner’s situation is different. While some owners want to save and continue operating their business, others may be ready to move on and sell their business. Understanding the practical differences between restructuring and selling can help you avoid making decisions based purely on financial stress.
The sections below cover when SBR may be the better option, when selling the business makes more sense, and whether both options can work together.
Key Differences
Small Business Restructure (SBR) aims to help a business to continue operating, while selling the business is about transferring ownership.
Following are its key differences:
| Small Business Restructuring (SBR) | Selling the Business |
| The existing owners usually remain in control during the restructuring process. | The current owner exits once the sale is completed, unless otherwise agreed. |
| Focuses on negotiating a reduced repayment plan with creditors. | Focuses on achieving the best possible sale price and completing a successful transaction. |
| Suitable for businesses experiencing temporary financial distress but can be saved. | Suitable when the owner wants to retire, move on, or the business can no longer be sustained. |
| Can improve the business’s long-term financial position if the restructuring is successful. | Provides an exit strategy but does not necessarily resolve business performance issues before sale. |
When SBR May Be Better
SBR may be the better option for businesses going through financial difficulties but still have the potential to recover.
If your business has demand, customers, and potential to make profits, restructuring helps you continue without giving up ownership.
SBR may be worth considering if:
- Your business is struggling with debt but continues to generate regular income.
- Cash flow problems are temporary rather than permanent.
- You believe the business can become profitable again with reduced debt obligations.
- You want to retain ownership and continue operating the business.
- The business has valuable staff, customers, suppliers, and contracts worth preserving.
- You are willing to work with a Small Business Restructuring Practitioner to develop a realistic repayment plan.
When Selling May Be Better
Selling the business may be a better choice if it no longer reflects your personal goals or is unlikely to recover financially.
You may consider this option if:
- You are planning to retire or pursue other opportunities
- The business requires more investment than you are able or willing to provide
- The industry has changed significantly, reducing future growth prospects
- You no longer wish to manage the business
- The business has strong assets, goodwill, or a customer base that makes it attractive to buyers
- Continuing to operate the business is no longer financially possible
Important Points about Selling
How the business is sold matters:
- Asset sale: The buyer purchases the business assets only. The company and its SBR plan stay with the existing entity, giving the buyer a clean start.
- Share sale: The buyer takes over the company itself, including its obligations under the SBR plan until it’s completed.
- Buyer due diligence: Expect buyers to ask about the restructuring, since it remains recorded on ASIC registers and credit reports.
Business sale on or during SBR
Yes, depending on the circumstances, a business may be sold during or after a Small Business Restructuring process.
If a sale occurs during the restructuring period, it must comply with the terms of the restructuring plan and any legal obligations. The proposed sale should not unfairly disadvantage creditors.
Note: A director cannot execute a sale during the SBR proposal period without the express written consent of the SBR Practitioner or a Court order. An unapproved sale is legally void.
Many business owners choose to sell after successfully completing SBR instead, since this can offer:
- Significantly less debt, making the business more attractive to buyers
- Improved cash flow and financial stability, increasing buyer confidence
- A higher valuation than before restructuring
- Greater flexibility during sale negotiations, thanks to a healthier financial position
Whether selling is the best option depends on the business’s financial condition, buyer interest, creditor obligations, and your personal objectives.
Next Steps
Deciding between Small Business Restructuring and selling the business is easier with the right information upfront. Acting early gives you more flexibility and a better chance of a positive outcome.
Practical next steps:
- Review your business’s current financial position — cash flow, debts, and assets
- Assess whether the business is fundamentally viable and capable of returning to profitability
- Clarify your personal goals — continue operating, or move on
- Get an independent valuation to understand what the business may be worth if sold
- Speak with a Small Business Restructuring Practitioner or insolvency professional to check your eligibility for SBR
It’s best to seek professional advice before financial pressures worsen or creditor recovery action limits your available options.
At Halo Advisory, we work with business owners, and directors facing ATO debt issues. Financial expert Greg Bartels offers a no-obligation consultation to help you understand your position, assess potential risks, and identify practical options for resolving tax debt before enforcement action limits your choices. Get in touch today.
FAQs
Does Small Business Restructuring affect the value of my business?
It can, but not always in a negative way. A successful restructuring may improve the business’s financial position, making it more attractive to potential buyers than it was before.
Can I start preparing my business for sale while considering Small Business Restructuring?
Yes. Gathering financial records, reviewing contracts, and understanding the value of your business can help you compare both options without committing to either one straight away.
Is Small Business Restructuring faster than selling a business?
They are very different processes, so the timeframe depends on your circumstances. Selling a business can take months to find the right buyer, while Small Business Restructuring follows a legislated process with specific timeframes.
Should I speak to a buyer before deciding whether to restructure?
If you’ve already received genuine buyer interest, it can be helpful to understand what your business is worth. However, you should also seek professional advice to compare that offer with the potential benefits of restructuring.
What if I’m not sure whether my business can recover?
You’re not expected to have all the answers on your own. A Small Business Restructuring Practitioner or insolvency adviser can assess your financial position and help you determine whether restructuring or selling is likely to produce a better outcome.
Can restructuring make it easier to sell my business in the future?
In some cases, yes. Reducing debt and improving cash flow through a successful restructuring may increase buyer confidence and make the business easier to sell when the time is right.
