15 Jul Around the Web: A Week in Summary
The following information has been sourced by Business Brokerage Press for the benefit of the business brokerage community. The views of these articles do not necessarily represent the views of Business Brokerage Press. We hope you find this information helpful.
A recent blog post from Exit Strategies Group entitled “Methods of Selling Distressed Business Assets” discusses options for businesses who become financially distressed as a result of the pandemic shutdown. There is currently an active market for distressed business assets, giving these owners some options to exit.
Four common ways to sell assets from a distressed business include:
- Asset sale in which lenders or creditors may be asked to forgive or discount outstanding debts
- Secured party short sale under Article 9 of the Uniform Commercial Code
- Asset sale in an Assignment for the Benefit of Creditors
- Section 363 asset sale in a Chapter 11 or Chapter 7 bankruptcy
A recent article from NuWireInvestor entitled “Buying a Business? Be Sure to Avoid These Mistakes” examines costly mistakes to avoid when buying a business. The current economic environment has created real opportunities for buyers, however it is still important to buy wisely in order to have a positive impact on your life.
Key mistakes for buyers to avoid include:
- Failing to ask important questions such as “Why is the business for sale?” and “What do I need to operate this business?”
- Failing to carefully inspect several years of tax records
- Not being honest with yourself and picking a business that doesn’t fit who you are
- Letting everyone go right away and replacing them with your own people
A recent article from Divestopedia entitled “Selling Your Business: What Sale Process Is Best?” discusses three ways to sell a business and the pros and cons of each. When it’s time to sell, it’s important to know your options and to carefully consider which option is right for your business and for your goals.
Three common ways to sell a middle market business include:
- Broad auction – This opens things up to the full spectrum of buyers, which can maximize value yet can also take longer and comes with a higher risk of a confidentiality breach.
- Controlled auction – This involves approaching a limited number of buyers who would be a good fit, which can help maintain confidentiality and drive a higher value yet it can take some time to complete.
- Negotiated sale – This involves a very limited number of buyers (often just one buyer), which can be quicker and confidential yet could lead to a lower sale price.