What to Consider When Selling Your Business
Selling a business is a huge undertaking and often an emotional venture.
Selling a Florida business is a major legal and financial endeavor that should only be approached with a complete understanding of all the issues involved. Owners who’ve never sold a business before are often surprised how much goes into the planning—and just how different the process is from when they bought or started the company.
If you’re trying to decide if now is the right time to sell your business, consulting with reliable legal counsel can help you achieve a positive outcome for this complex business transaction.
Is It Time to Sell Your Business?
Selling your business is one of the most important decisions you can make. The business owners we work with have various reasons for selling, including:
- Deciding to retire.
- The joy of owning and operating the business has faded.
- An offer’s been made that can’t be refused.
- Maximum growth potential has been reached.
- A life-changing event makes it necessary to sell.
Because there’s no one reason people sell a business, no two business sale transactions are structured the same. Before you even think about listing your Florida business for sale, you need to ask:
- Is my business worth selling?
- If yes, what is it worth?
A business valuation is essential to determining what your business is worth. Business valuation approaches include fair-market value, market value, asset-based, and earnings value. Each industry and company has its own unique norms and multipliers for estimating their business’s economic worth. No matter which approach you choose, working with a professional ensures you arrive at accurate, realistic, and competitive selling prices.
Issues to Address In a Business Sale Transaction
Once you arrive at a value for your business, here’s what comes next.
What’s Being Sold?
There’s a significant difference between an asset sale and an equity sale.
- An asset sale typically includes property, land, contracts, intellectual property, and products, with outstanding debts and liabilities remaining with the seller.
- An equity sale involves shares, stock, and interests, with the new owner taking on full ownership, including assets and liabilities.
What Is Your Selling Price?
If you’ve ever bought real estate or a car, you know that different price points yield different results. The same holds true when selling a business. For instance, a seller desperate to exit the business may be willing to sell below market value. Yet, if you price your business too low, you might telegraph desperation to potential buyers, alerting them you can be “beat up” on price.
Buyers often have demands they want met before investing in a business. Are you willing to:
- Stay on and train the new owners?
- Provide consultation services?
- Perform marketing and sales for a set time after the sale closes?
Other factors buyers frequently use when determining what they’re willing to pay are whether the current workforce will stay on, current market conditions, and future profit projections.
Do You Need a Business Broker When Selling a Business?
Even if you’ve sold a business before, have interested buyers, or are in preliminary talks with a buyer, bringing in a business broker to help can be invaluable. Not only can a broker help you identify qualified buyers, but they also allow you to remain focused on maintaining and growing your business as you search.
From advertising your business to helping structure the sale, a professional business broker can help you manage the entire sales process.
- Structuring the Sale. A broker helps identify the best possible price range to sell your business. Their recommended price is based on solid facts like similar sales, time-proven valuation techniques, and how attractive an investment your business is.
- Networking Confidentiality. Qualified brokers have a broad reach which increases your chance of a successful sale. They also know how critical it is to maintain confidentiality during the sales process.
- Advertising. Brokers know how to get maximum exposure for your company using multiple industry databases, online sites, and publications. They’re also skilled at creating competition for your business amongst qualified buyers.
- Pre-qualify Buyers. Brokers say about 90% of initial responses to their advertisements are from unqualified buyers who can’t or won’t meet your terms. Why waste time talking to these buyers when you could be dealing with more important issues?
From start to finish, a business broker works closely with you to ensure a smooth transition.
Ready to Sell Your Florida Business?
Selling a business is a huge undertaking and often an emotional venture. Aside from all the considerations set out in this post, there are legal documents to draft, sign, and file, various people who must be communicated with, and tax issues to address. Handling a business sale on your own can seem like a more cost-effective approach, but the risks of selling on your own generally outweigh any legal or broker fees you incur.
Are you ready to sell your Florida business? Munizzi Law Firm provides personalized and innovative Business Legal Services for established and startup businesses. Contact us today to learn how we can help you choose the best way to sell your business. We’re here to help.