Selling Your Business? Start Planning Early
Jan. 12, 2014
Boomers: Avoid the Rush
Many commentators predict that business owners born during the baby-boomer era will be selling their businesses over the next 10-15 years. Some believe that the increase in business sales may actually reduce the value of some businesses because of the increased number of businesses for sale that are available to potential buyers.
You should should begin planning for your exit strategy or sale of your business now – long before the actual sale. Since business owners typically concentrate on running their businesses and not selling businesses, a wise business owner will seek advice on how to best sell and maximize the price of the business. No matter what your time horizon is for the sale, it’s never too early to begin planning for it.
Include Your Advisors in Your Exit Plan
Speaking with an attorney experienced with sales of businesses can help you understand the many issues that arise and the common mistakes made in the sale of a business. It is also wise for you to speak with your accountant, personal financial advisor and insurance agent. It is important to know the value range of your business to know if it will be sufficient to meet retirement needs or if there are things that can be done now to maximize the value of the business at the time of sale.
Start Making a Checklist
In addition, there are steps you can do to take to make your business more attractive to a buyer. Should physical inventories be taken and should financial statements be audited? Are contracts and non-compete agreements with key employees in place? Are agreements with key customers or vendors in place – are they assignable to a new buyer?
Making the Sale
When it is time to sell the business an experienced attorney can provide advice on methods used to select an investment banker or business broker and advice on structuring their agreements to benefit you. For instance are there competitors you do not want contacted? Does a commission get paid on the sale or lease of real estate used in the business? In addition whether the transaction is structured as a stock sale or asset sale an attorney experienced in the sale of businesses can counsel and advise you on ways to minimize your post-sale liabilities as well as take steps to maximize the sale price of the business. Additionally, in certain cases a sale of the business to employees can provide tax advantages to you.
In short, any business owner who will someday be selling a business is wise to start planning with an attorney experienced in selling businesses.