Issues With Selling a Business

Although the proceeding is a rough overview of the process, there are many issues and decisions that must be made along the way. These issues include such as:

  • Is the business ready to be sold? There should be qualified employees in key positions so that there will be continuity of management through the change of ownership. Shop and office should be organized, neat and clean. Internal financial statements should be consistent and reconcilable with the company’s tax returns. Balance sheets and Income statements may need to be re-formatted for concise presentation of critical information and elimination of extraneous information.  
  • Are all shareholders ‘on board’ for the sale?
  • How is the company doing?
  • Are sales increasing or declining?
  • Are there sales initiatives in place to increase sales?  (an assessment might identify areas that require attention).
  • Would the owner accept an offer that required:
    • An asset sale
    • A requirement for seller financing. (The best price is often achieved with the seller taking a buyer’s note for 10% -20% of the purchase price in order to facilitate bank financing).
    • That the owner stays on as a consultant for an extended?
  • The Price of the Business. In most of the deals that I am involved with we do not put a price on the business, but let the buyer first express a level of interest. Negotiation of the price is better left after we have ascertained that a buyer wants to own the business and is willing to pay a reasonable price.

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