If you are thinking about selling your business, there are a few things you should know. We’ve summarized the important stuff here so that you can make a more educated decision about what it would take to sell your business, and whether or not you still want to sell.
Things to Remember When Selling a Business
Determine Price – It’s important to be realistic when determining the price of your business. If you set the price too high, you’re likely to scare away buyers. Many people set a high price thinking that they will still make more money after negotiations, but it’s actually not the case. More often, setting the price at a more accurate valuation typically means less negotiation and more money for you.
Taxes – Depending on how your business is set up (sole proprietorship, general partnership, LLC, etc.), and how you plan to sell it, taxes could potentially take a huge chunk of your profit. It is in your best interest to talk to a business attorney or tax professional to determine how much taxes are going to cut into your profit and how to minimize it.
What Are You Selling? – You’ll have to decide exactly what you are selling early on. Are you selling the business as a whole, or just the assets? Selling the whole business includes the name and brand, while the assets means you just want to part with the physical property, such as a building, tools, vehicles, appliances, etc.
Clean Up for Buyers – Not only should you clean up the actual business, but you would do well to spruce up the books a little. Try to minimize debt before you start looking for buyers to make the business more appealing. Another good trick is to recast your tax return. You can do this to add back any discretionary expenses, such as personal health insurance for your family, so that the profit margins look better to the buyer.
Sales Agreement – Get it in writing! This is probably the most important thing to remember. Create a sales agreement that both you and your buyer will sign. Include an itemized and valuated list of everything you are selling so that there is no question later. Have a business lawyer review or create an agreement for you prior to signing.
Call or fill out an online form today for a free consultation, and find out how the Monmouth County business lawyers at Garland & Mason, LLC can help you.