What to Consider Before Selling Your Business
Growing a business takes a lot of hard work and dedication. For many business owners, their company is just as much of a passion as it is a way to make money. For many, the thought of selling their business is unthinkable. However, there might be times when selling your business is a smart move to make. Whether for financial reasons, because you’re retiring, are deciding to get involved in a new venture, etc., there are some things you should consider before selling your business.
Your Business’s Structure and Ownership
How your business is structured will affect how it’s sold. When you’re the sole proprietor or owner of the business, you typically have free reign. However, when your business is a corporation or a limited liability company (LLC), then each member as well as shareholders need to come to an agreement for the business to be sold. Often times this involves mediation and sometimes even litigation.
Your Employees
When selling your business you’ll also need to take your employees into consideration. In some cases, your employees might be able to resume employment under the new owner. However, this might not always be the case. Whether you’re transferring ownership to someone who you trust to continue running the business or your business’s future might be uncertain, you’ll want to talk to your employees beforehand so they can be prepared.
Consider the Reasons for Selling Your Business
You should ask yourself why exactly you’re selling your business. Is it because you’ve lost your passion, you’re unable to continue running the business, or you simply have an attractive buy-out offer. If you’re passionate about your business then you’ll want to ensure that it lands in good hands.
Determine the Value of Your Business
It can be hard to value a business that you’re extremely passionate about, but when you’re valuing your business, it’s best to put sentimental value aside. By doing so you can better accurately value your business and set a realistic price. Some methods you can use include consulting with a CPA, hiring a business evaluator, or doing market research.
Due Diligence
You’ll want to protect key information about you and your business. Most likely, a potential buyer will ask to see your financial records. Not only do you want to ensure that all your documents are in order and there’s no missing information, but you will also want the other party to sign a confidentiality agreement.
Consider Hiring a Lawyer
To help make the process easier, you’ll also want to have an experienced lawyer on your side. The right lawyer will ensure that everything’s in order and that you and your business will be protected. The United States Small Business Administration has a specific list of information that needs to be included in the business sale agreement and a lawyer can ensure everything’s included.
Deciding to sell your business can be a stressful ordeal. To make the process easier, having an experienced business sales lawyer on your side can help. Our friends at Carpenter & Lewis PLLC have a team of lawyers that can help!