About DeChello Law Firm LLC
Admitted to both the Connecticut and Federal courts in 1985, Tony DeChello has committed his career to assisting Connecticut residents and businesses with a wide range of legal issues.
There are many ways to sell a business. You can more-or-less transfer ownership to a close friend/family member, you can accept the first offer you receive, you can keep it on the market for years while fielding offers and continuing to grow, or any number of other tactics.
One of the weirder tactics ever seen was recently used by Treasury Wine Estates. They showed signs that they were listing the company back in August for $5.20 a share. They ended up receiving quite reasonable offers from 2 separate private equity firms, who were then both told to take a hike.
While this may seem like an absurd business move, and completely contrary to the idea of selling a business in the first place, there is one likely explanation: The board didn’t consult with the shareholders about selling the business.
This is an important lesson for public companies. It seems somewhat strange that Treasury Wine Estates didn’t see this coming, but shareholders can hold a massive amount of power over a company, and can stop the sale of a business cold.
In the case of Treasury, they have had a rather tumultuous past, and it appears the board of directors no longer has faith in the ability of the current leadership to be profitable. The shareholders disagreed, effectively telling the board that the selling price was far too low, and they ended up winning the day. The downside is that this drama has caused the stock price to plummet, losing $0.70 in one day.
This is why it is absolutely crucial to have all your ducks in a row before making any public announcement about selling a company. Any battles like this are going to scare away potential buyers, and it can even cause your company to be viewed as less valuable than it otherwise would be. That is the last thing you want when trying to attract a buyer.
If you ever have any questions about buying or selling a business, do not hesitate to get in touch with a qualified business attorney today.
Forming or starting a business can be a great learning experience for many people, as it requires you to start something with a plan for how it ends. That is, as popular author Stephen Covey would say, “Begin with the end in mind.”
What that means is that any long-term successful business needs to have contingency plans in place for what happens when an owner leaves or sells the business.
That is where the acronym DICE comes into play. Business exits generally happen because of one of these four reasons:
All of this factors into selling a business since obviously plans will need to be in place in case one partner wants to sell and the other does not, and also because any potential buyer will want to see that there are plans in place to deal with these eventualities.
So, how do you plan for these things?
Well, any business plans will need to be drawn up by an attorney, but even just sitting down with all managing partners and discussing the following will help.
Any major decisions such as selling or exiting a business should be run by a qualified business attorney, so if you ever have any questions, do not be afraid to get in touch with one today.
When it comes to selling a business, there are many factors that play into how much a business is worth, and how eager prospective buyers will be to put in an offer.
There are many obvious ones, such as size of the customer base, stability of employees, age of technological equipment, etc. One of the less obvious factors, however, is how important you are to the business.
Take, for example, someone who built a web-only business that takes online orders and emails out PDF guides and manuals. Compare that to a graphic designer who built a business selling their own specific art style. In one of those businesses, the presence of the owner is crucial; in the other, not so much. Which do you think would be more valuable to a prospective buyer?
The former is definitely more valuable to a buyer, as there would be a small interruption in business-as-usual, as opposed to a massive shakeup.
The good news is that, even if your business is highly dependent on you, knowing what a buyer will be looking for enables you to try to fix the issue. You could start transferring responsibilities to other employees, or starting to offer more standardized package products, or even using technology to manage some of the personal touches you were putting in. No doubt none of this will be an easy solution, but to sell a business, you optimally want to make the transition as easy on the buyer as possible.
There may not be a one-and-done simple solution, but if you talk with your business attorney about these issues, they will be able to offer you advice and help you take steps down the right path.
The decision to sell a business is likely going to be fraught with uncertainty and emotion, and plenty of time taken to consider all possibilities and options. Some people just up and decide to sell their businesses, but far more likely, the decision-making process is months or even years in the making. Certainly a well planned business sell will likely provide a better result for the seller.
Once the decision has been made, however, it is not uncommon for individuals to step on the gas with full force. While there is certainly some wisdom to striking while the iron is hot, especially is a buyer approaches a seller, it is also true that a little patience throughout the process will serve you immensely well.
There are so many complex parts of getting a business ready for sale that you cannot afford to skip past any of them. Organizing entity documents, making sure financial statements are in order and possibly audited, confirming all taxes have been paid by the business, ensuring all employee matters have been taken care of, like employee withholdings and over-time pay, , standard operating procedures manuals often need to be created, customer records need to be gathered and in some cases customer relations formalized via contracts that are assignable, etc.
Once all that prep work is done, it’s time to find someone to represent your business. They will likely have some more advice for you on more preparations to undertake, or recommendations on valuations or potential buyers. Even if they come back to tell you that your business is ready to go, finding potential buyers can be a lengthy process.
Speaking of buyers, do not necessarily jump on the first offer you get. If they have a solid business history, meet all your requirements, and offer you a good amount, then by all means, continue to take steps with that person. However, remember that this is your business. If you are seeing red flags from the prospective buyer and your attorney agrees, then do not be afraid to hit the brakes.
As you can see, the process of actually selling a business is rather involved and can take quite a bit of time. Do not despair, however. Keep your eyes on the prize, keep your feet moving forward, and keep your attorney close at hand. Before you know it, the process will be over, and it will be time to collect your check and relax.
So, you came across some money, and have made the decision to buy a business. Congratulations! Owning your own business is one of the most proactive, practical, and responsible decisions you could make.
Once you have found an industry and geographic location that interest you, you should now take a closer look at some businesses. With your business attorney in tow, it is time to do your due diligence. Buying a business is an extremely big decision, so it is important to take as much time as you can to perform research.
For example, why is this business for sale? Is it because the owner simply wants to retire? Is it because the market for the product they offer is shrinking? Is it because they can no longer be competitive against online stores? Is it a general problem with workforce attitudes? There are many valid reasons for a business to be sold, but not knowing why could find you head-to-head with a massive financial problem just a short while down the road.
You also need to investigate the business’s relationships with its employees, customers, suppliers, and vendors. You should also check with any relevant industry licensing boards, credit reporting agencies, and the Better Business Bureau for any complaints.
Once you have done all that, it is time for you and your attorney to start looking at the company’s finances and asking price, and if everything comes up green, make a bid. Before you know it, you may find yourself the owner and manager of your own company.
Building a business is immensely difficult. You have to have a strong idea, be able to market it well, hire the right people, have systems in place to allow growth, and have the patient hard work to never give yourself a break until it turns into a success.
It must be far easier to simply buy a business then, right? In some regards, certainly, but in others, not so much. While anyone with enough money could go out, throw it around, and come home with a business at the end of the day, making a smart purchase will take quite a bit of research and effort. You do not want to be stuck with out-of-date equipment, angry employees, and inefficient practices.
To help you down the path towards business ownership, here are a few preliminary tips:
One of the first things you will want to do is start looking at industries that interest you. Since you will be putting a lot of time and money into this business, it should be something that interests you and is easy for you to understand.
The next thing you will want to do is find a geographic area that interests you as well. It could be an area famous for the industry you’re looking in, it could be an area close to family and friends, or it could just be somewhere that has always fascinated you.
Finally, talk to a business attorney familiar with the area about your thoughts and your goals. They will likely have some invaluable insights into the markets you’re looking at, and they will be able to help you prescreen out the companies you want to avoid.
If you ever have questions about buying or selling a business, get in touch with a skilled business attorney as soon as possible. There are numerous pitfalls to avoid during business transactions, and the hard-won wisdom of experience cannot be replaced.
The road to selling a business is always long. Usually feelings will start to build up over time, and ultimately, when someone finally decides to go forward with a sale, they tend to have had it on their mind for a while.
Depending on how long you have been thinking it over, you may have already started getting your ducks in a row. If you have not, though, one of the most important things you can do early is start to gather up all of your documents.
Any potential buyer is going to want to see copies of as much paperwork as you can provide. Financial statements going back years, tax returns going back years, lease agreements, etc. In addition, potential buyers would certainly like to see a detailed list of every item of equipment that is included in the business sale, as well as a detailed list of contacts, both for sales transactions and business supplies.
If your company has an operations manual, that should be included in your info packet as well. If not, then you should type up a brief summary describing how the day-to-day business is conducted.
All of this information is to make the transaction as easy as possible for the buyer. You want them to walk in and be immediately impressed with the full meaning of just how valuable your company is, so that their decision to buy comes completely naturally.
Obviously, the details of selling any business are complicated and involved. If you ever have any questions, or are considering buying/selling a business, do not hesitate to get in contact with a skilled business attorney today. The difference between doing it yourself and having help can be drastic.
For many entrepreneurs, the main goal they’ve held onto through the years of hard work and stress, and in their loftiest dreams, is being able to sell their business for a big profit and relax.
Often times, though, once that point approaches, panic sets in. Years and years (even decades) of your life have been dedicated to nurturing and growing the company you created, and facing the prospect of completely giving it up and walking away can be daunting.
If you do find yourself wondering what the next chapter after a business sale will look like for you, here are some suggestions:
Whatever life after a business sale holds for you, during the sale, you need the experience and guidance of a skilled business attorney. Call today if you have any questions.
One of the most important things you can do with your estate plan is pick the right person to carry out your wishes.
Even if you have the most detailed, elegant, and absolutely perfect estate plan, if you pick the wrong executor, there can be years and years of frustration and difficulty ahead for your loved ones.
Take, for example, the popular case of the Walt Disney estate. Walt Disney died in 1966, and his youngest daughter in 1993. He left most of his estate in trusts which, for everyone but his youngest daughter’s heirs, have been fine.
The trusts were set up so that the grandchildren would receive certain chunks of their inheritance as they aged, and reached certain predetermined thresholds. The problems for Walt’s youngest daughter’s children, though, are the trustees who are exercising their rights to deny payment at seemingly every opportunity.
The grandchildren who are being denied their inheritance are claiming that the trustees are making up claims of mental incompetence in order to continue receiving their $1 million salaries, and that this is a form of retaliation for other grandchildren taking their inheritances and putting them in other financial firms.
Regardless of the truth of the matter, the lesson to be learned is valid: Be extremely careful with who you entrust to enact your will.
If you ever have any concerns about your will or trusts, get in touch with an experienced estate planning attorney today. They will be able to help guide you through the entire process.
If you are currently undergoing a divorce, or recently went through one, it is likely your brain is filled to capacity with concerns, worries, and stresses.
Once you have any small semblance of peace, though, it is important to add one more thought to the list: Estate planning.
If you had an estate plan all set up in your marriage, it is crucial that you have it looked at and update the relevant data as soon as possible. Estate plans are basically ways to designate where you want your money to go, and given that you likely don’t want too many of your assets going to your ex-spouse any more, it is well worth taking a look at your plan. Most divorce agreements specifically extinguish your ex-spouse’s rights under wills and trusts, but do not just take that for granted.
Also, do not forget that it’s quite possible some of the assets you mention in your estate plan are no longer in your possession to begin with.
The main thing you need to watch out for, though, is with children under 18 years of age and any property held in conservatorships. Courts will appoint guardians for minors, which will usually end up being your ex-spouse, so even though your child will not have any legal claim to the property until they are 18, your ex-spouse will likely have the ability to effect how your assets are used.
You can often work your way around those issues by setting up trusts for your children instead of conservatorships, but all of these issues are best brought up with an experienced estate planning attorney. They will be able to advise you of the best way to protect your assets, and get them where you want them to be.