Business owners follow vital steps when selling a business. These steps guide them through the process and prevent bumps during and after the sale. The owner must have the business’ affairs in order before selling, and buyers must know how profitable it is before buying. Brokers show business owners how to sell their company and get the most out of the sale. Understanding what problems could arise helps the business owner cover everything before placing their property, assets, and business name on the market. Knowing the comprehensive steps for selling a business prevents delays and legalities that could stop a sale.
A Professional Valuation for the Business
A valuation for the business helps the company arrive at a selling price and know what they can expect to net from the sale. The details help them choose when to sell the property and get the most out of the sale. Appraisals show exactly how much the business and its assets are worth. The current market shows how much buyers are paying for businesses of the same size, success rate, and in the same industry. Business owners who need a business valuation can contact a broker and set up an appointment right now.
Review the Current Financial Status of the Company
The financial status of the company determines if it is successful and a sound investment for buyers or investors. Companies that have faced serious financial trouble might not present as a significant investment. However, investors who are interested in the brand and the company name won’t turn away from the sale. Some investors want to find companies that need financial help to get more out of their own investments. The business owner must consider what will happen to their company and workers if they sell to an investor.
For instance, it is important to find buyers that want to continue the same company without major transformations when employees are involved. The sale would require the buyer to keep the workers employed with the company and avoid any personnel cuts. Contractual stipulations prevent buyers from purchasing the company and stripping it down, and it might give the owner a better chance of getting what they want the most from the transaction.
Identify What You’re Selling with the Company
They must list business assets included in the sale in the sale contract, and that contract must explain all details about inclusions. The business owner cannot just say they are selling everything without a full list of all assets. This could lead to confusion about what is for sale. The broker goes through the business assets and catalogs them. The owner reviews the list and removes any assets they don’t want to sell. They must remove personal items stored in the commercial building along with assets the owner wants to keep. Preventing confusion gives the buyer an ironclad contract that won’t be disputed later.
How the Company’s Reputation Affects the Sale
The company’s reputation affects the sale of the business. The business owner may need to do some damage control before they place their business on the market. Negative reviews and press about the company could decrease its value, and some investors will take a step back. The company must complete reputation management and eliminate negativity if they want the full selling price for the property, business, and its brand. Improvements in how the public views of the company are necessary before the business owner presents the business for sale to any buyers or investors.
Speak With Workers about Staying or Leaving
Contractual obligations to workers must be considered when selling a business. The owner cannot end an employment contract without just cause. For this reason, the business owner must discuss the sale with employees who have these contracts. The company can buy out the employment contract, or they can add contractual obligations in the sales contract to enable the workers to get the full benefit of their employment contract. The stipulations prevent the buyer from terminating the employment contract and keeping the workers at the business. After the term of the contract, the buyer can do as they wish.
Managing Company Debts
The business owner must manage debts, and the debts could transfer to the buyer during the transaction. A company swimming in a sea of debt is not appealing to buyers. Buyers who are preparing the sell their company must follow steps for eliminating their debts and preventing creditor-related liens. When selling a business, the creditors could take action to prevent the business from selling key assets if the debt volume is too high. A consolidation loan could help the business owner pay off debts, and they could settle the loan balance after they sell the property.
Manage All Tax Responsibilities
Federal and state taxes responsibilities could cause hiccups in a sale if the business owner doesn’t pay their taxes fully. The IRS is within their rights to seize assets if the business hasn’t paid their tax obligations or has an existing tax lien. The business owner must follow tax laws and set up a payment plan for any outstanding tax balances. If they don’t manage their taxes, the federal agency could stop the sale and seize assets for tax payments.
Reviewing Patents and Trademarks
Patents and trademarks related to the business often go with the company and its brand. Transferring these assets to the buyer gives them control over products manufactured by the company. It also gives the buyer the legal right to use trademarks owned by the company. Using patents or trademarks without legal permission or ownership could present legal issues for the buyer.
Business owners prepare for the sale of their company by reviewing all legalities related to the sale. It’s not as simple as just transferring ownership, and the buyer needs a list of all assets connected to the business. Financial records such as tax returns show that the business has fulfilled its tax responsibilities, and the federal government cannot seize assets after the sale. Reviewing all details about selling a business prevents common problems that reduce the value of a business.