How you ever considered selling a business? You’ve worked hard to build your business. It started as an idea, then became a reality. From there, it grew into a viable business that makes you a steady profit.
Now is the time to consider selling your profitable business to an interested buyer.
Selling a business is more complicated than simply posting a listing and accepting an offer. Before you begin the process, you should speak with a qualified attorney.
1. Business Value
Before you can sell anything, you need to determine its value. This will give you a starting point for negotiating a sale price with a potential buyer.
The value of your business is more than just the physical assets. It also includes the value of your physical location, supplier relationships, employee experience, and customer lists.
Your attorney can either help you make a value determination or connect you with a business appraisal service. The buyer will want to secure their own valuation, but you should have your own for comparison.
2. Define What Is For Sale
Do you plan to sell your entire business or only a part of it? Meeting with an attorney before you decide to sell ensures you clearly define what is available for sale and what is not. Otherwise, you risk selling something that you didn’t intend to.
Selling a business can be messy, especially if the business has several assets. It can also get more complicated depending on how the business was formed. If you formed your business without the assistance of an attorney, there’s a risk that it wasn’t correctly formed. Your attorney will need to make the necessary corrections before you attempt to sell.
3. Discuss Terms of Sale
Discuss with your attorney the sale terms that you’ll accept. This could include the liability you’re willing to take on, indemnity provisions, tax liabilities, or asset allocations. Perhaps you want to remain on board as a consultant for a period of time.
Discussing these provisions ahead of time can make it easier for your attorney to negotiate with a potential buyer later on. This can make for a smoother negotiation experience and easier sale process.
4. Sale Timeline
It’s important to let your attorney know what kind of timeline you’re considering for the sale. If you need to sell the business quickly, then this can affect the sale price, selling process, and urgency of document preparation.
Your attorney can also advise you of your current situation. In a situation where you’re selling a struggling business, selling quickly may help you satisfy creditors.
5. How You Plan to Sell
Depending on how you go about selling your business can significantly affect your tax liability. There are two methods to choose from, asset purchase or stock purchase. However, unincorporated businesses can only choose the asset method.
Generally speaking, most business owners find that a stock sale is more advantageous to them. While an asset sale is more beneficial for the buyer. It’s best to speak with an attorney who can advise you of the best course of action for your business sale. Your attorney will also explain the potential tax liabilities that result from each type of sale.
Discuss Selling a Business With an Attorney
If you are considering selling a business, then it’s time to speak with an attorney. Many will offer a free consultation to discuss your needs. Prepare to answer several questions about when you plan to sell your business, its current profit performance, and how you want to sell your business.
Our team is ready to assist you with the sale of your business. Contact our office and schedule a consultation today.
