03 Jan Around the Web: A Week in Summary
A recent article posted on Entrepreneur.com entitled “6 Things You Must Know When Selling Your Business to a Third Party” explains some of the most common issues that you may face when selling a business to third party, and how to avoid them. Here are the areas of a business sale to focus on before you sell:
- Preparation – Start preparing years in advance for the sale of your business so you have time to shop your business to third parties.
- Finding a buyer – Using a business broker, contacting a vendor or supplier, or approaching a competitor are three ways to find an ideal buyer for your business.
- Due Diligence – Have all of your documentation and records ready ahead of time for potential buyers to review.
- Negotiation – Be prepared for negotiations and look into having your advisor or lawyer help you with the negotiation process.
- Document prep & review – Try to find a business attorney who is specialized in business sale transactions and has a strong tax background to assist you with the transaction and explain all of the contracts and agreements.
- Closing & asset transfer – Work closely with the buyer to make sure the transition goes smoothly and do not take money or give control of the business until all paperwork is reviewed, approved and signed.
A recent article from The San Angelo Standard-Times entitled “Business tips: Don’t neglect due diligence when buying a business” emphasizes the important of due diligence when buying a business, which consists of looking into and understanding the important aspects and fine details of the business before closing.
The first aspect to consider is if the business is right for you and your personal circumstances. Taking over a new business will require some help from the previous owner who has knowledge of the business and the industry. You will also want to take into account how many hours are needed, if the job will involve a lot of physical work, and if your family supports you in the purchase of this type of business.
Reviewing and analyzing the seller’s numbers and documents is also a huge part of due diligence. Consider using the help of a CPA, consultant or business broker to go over the financials of the business. You will also want to look into things such as if there are any claims on the business or if the business owes back taxes. Doing your due diligence now will ensure that there are no surprises later on in the process.
A recent article posted by The National Law Review entitled “Thinking of Selling? Start Early, Build Your Team” explains the importance of putting together a good team of trusted advisors well in advance of selling your business. Your team should include an attorney, accountant, investment banker, and wealth manager. This team will help you with various aspects of selling your business such as:
- Setting a realistic valuation on the business
- Finding potential buyers
- Handling due diligence and information requests from buyers
- Structuring a transaction for tax & liability protection
- Dealing with the sale proceeds and making sure your goals are met
It is a good idea to put this team together as soon as possible if you’re thinking of selling, so everyone has time to prepare. There are so many aspects to a business sale and it is essential to have an experienced team of professionals to guide you in the process.