Tips for Selling a Business
If you’re looking to sell your business, there is a lot to consider. Of course you want to get the best deal, but you also want to comply with the law, minimize taxes, and make sure the new owner will take good care of your legacy. Whether selling your business is a long term or short term goal, there are several things you can do to get the best deal possible.
Preparing to sell your business down the road
Even if you’re not planning to sell your business for many years, there are things you can do to put your business in a good position for a future sale:
- Choose the right business entity: Forming a corporation or limited liability company (LLC) for your business will make it more attractive to buyers and provide many additional benefits for you now.
- Negotiating your commercial lease: If you sell your business in the middle of your lease term, you will need to assign the lease to the new owner. You should take this into account when negotiating your lease, because the lease might not otherwise allow such a transfer.
- Run a good business: In addition to the most obvious factor (maximizing profits), how you run your business now may affect your ability to sell later. Complying with employment laws, ADA guidelines, and other requirements, can help you avoid business litigation that could ruin your chances of selling the business for a good price. Make sure to keep good financial records to show potential buyers how valuable your business is.
Preparing your business now for an eventual sale is a good business move that you will be glad you made when the time comes.
Preparing to sell your business now
There are many moving parts during the sale of a business. Getting the best deal, minimizing taxes, and avoiding liability depends on how well you manage these parts. Some questions you should ask yourself are:
- What is my business worth? You would benefit from hiring a valuation expert who can take all aspects of your business into account, including business assets, as well as intangible parts of your business like goodwill and contracts to which you might be a party.
- What should the sale terms be? Once you have an idea of what your business is worth, you can start thinking about your sale terms: price, timing, taxes, payment structure, asset and real estate transfers, stock sale vs. asset sale, etc.
- How will the buyer pay? If the buyer cannot finance the sale completely with outside financing, you may have to allow for installment payments for part of the purchase price.
- What else is required? California law requires certain filings be made in connection with business sales. You may be subject to California’s bulk sales law, and you may have to pay California sales tax, for an asset sale. If you allow the buyer to pay you in installments, and obtain a security interest in exchange, you will need to file paperwork with the Secretary of State to insure your position among creditors. You may also need to file dissolution documents for your business entity, or business termination documents.
As you can see, selling a business is a complicated process. Doing your homework, and managing the various parts well, can help make the sale go as smoothly as possible.
Helix Law Firm can help you sell a business
If you’re looking to sell your business, we can help. We can structure the deal to minimize taxes, draft all necessary documents, and negotiate with the other party on your behalf.
If you’re interested in learning more about how Helix can help with your business sale, please call us at (619) 567-4447 to schedule a free consultation.