SELLING A BUSINESS
Business owners each have their own, various reasons for selling their business. For some, selling may be due to retirement considerations, health reasons, a change in lifestyle or a just change of pace. Still, others just want to be free to focus their attention on creating another business or pursue other interests. Under any circumstance, it is important for both the buyer and the seller to carefully review the business and its assets, liabilities, and revenue streams prior to completing the sale.
One of the primary steps to take when selling your business is obtaining a proper valuation of the business. Many times, people are surprised by what their business is actually worth on the open market. Before disclosing any company information to prospective buyers, you will want to ensure your company secrets are fully protected and you may need some type of Confidentiality Agreement or Nondisclosure Agreement in place before you disclose. Any potential buyer has the opportunity to also quickly become a major competitor if given enough of your information. Any potential buyer should be properly vetted before you disclose your information.
Other considerations may include whether or not you would like to retain some type of income stream from the sale or, at the other end of the spectrum, do you want it fully sold, gone forever? Whether you’d like to retain any part of the business name, income flow, liabilities, or other items will have a bearing on which type of sale you select, Asset Purchase Agreement or Stock Sale, and depending on your selection, perhaps ancillary documents detailing the additional aspects of the sale, if any.
An experienced business attorney can assist you with determining the price to be paid and method to do so, representations and warranties of both the buyer and seller, details of the business that will be included in the sale, including all assets and liabilities, and any pre-sale items that must be resolved before closing, and which items might be excluded from the sale. Related necessary documents can include Security Agreements, Promissory Notes, and transfers of intellectual property that helps customers find you, such as local and 800 numbers, websites, any on-going advertising agreements that may need to be assigned, and several other considerations that may need to be addressed as a part of the sale.
If you have decided to sell your business, proper documentation of all liabilities and obligations needs to be documented carefully, as the revenue stream used to service them in the past will be gone. Whether or not the buyer is able or willing to assume them may require an adjustment in the purchase price, an item easier to adjust in advance, rather than after, you find a buyer. Preplanning the sale of your business with the help of an experienced attorney can help you overcome many pitfalls.
Should you decided to sell your business, please call Susan Larsen at (303) 520-6030 for a consultation to find out how an experienced attorney can add value to your transaction.