ARE YOU REALLY READY TO SELL YOUR BUSINESS…
…but you have inadvertently positioned yourself to be a one-person Deal Killer for, what could be, your most important deal in years? Your decision to sell your business to outsiders or to new partners may be motivated by a variety of reasons, including your age, business stagnation, boredom, a desire to sell at the peak, or a desire to move your residence. Or, you may have been approached by a competitor or investor desiring to acquir your position in the marketplace. Since your business is privately-held and the value of
Your decision to sell your business to outsiders or to new partners may be motivated by a variety of reasons, including your age, business stagnation, boredom, a desire to sell at the peak, or a desire to move your residence. Or, you may have been approached by a competitor or investor desiring to acquire your position in the marketplace. Since your business is privately-held and the value of your business is not readily known, your lack of knowledge of one or more of the following questions could create an environment where you make decisions based upon a lack of information or poor information.
The Hancock Firm regular aids business owners and partners in answering the following examples of important business value and transaction questions:
Upon signing a Confidentiality Agreement with the prospective buyer (but prior to signing a Letter of Intent), to what extent should you, the business owner, share secret business financial and operating information with the prospective buyer?
Should you as the business owner disclose your requested/desired selling price and terms to the prospective buyer, or wait for the prospective buyer to make the first offer?
Should you sign a broadly defined Letter of Intent, or a Letter of Intent that is essentially a detailed blueprint for the business sale documents?
At what point should key, non-owner employees be told about the possible sale?
What is the business worth on an “as is, where is” basis?
Is the business worth more to the potential buyer than to you, the business owner, on an “as is, where is” basis”?
How much cash can the selling business owner expect at closing?
How much income tax will the seller have to pay? What tax rates, ordinary and/or capital gain, will the seller be subjected?
How much of the buyer’s debt or buyer’s equity can the business owner expect at closing, in addition to cash paid by the buyer to the seller?
If the selling business owner is expected to continue managing the business after the sale, what is a fair salary and compensation agreement?
Can the selling business owner reasonably expect to be financially rewarded by the buyer for future growth in the business value after the sale?
What risks does the business owner experience during the period between signing a confidentiality agreement and closing the sale?
Selling all or part of your business to outsiders or partners is easily done in haste. However, severe remorse is likely to occur when it is done in haste and the answers to important questions, such as those above, are not addressed. The Hancock Firm regularly assists business owners, on an independent basis, to help guide them through a complex and, at times, trying process.
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