Tag Archives: Buying or Selling a Business

Buying or Selling a Business

Buying or Selling a Business

This brief roundup will give you the basics for buying or selling a business.

Buying a Business

It is a fair assumption that when an operating business is purchased, the intent of the buyer is to acquire a present or prospective profit generator – a known entity that will provide a reasonably predictive return on the investment.

Buying a company is much like courtship. It is a process not known for rapid conclusions. Done correctly it is a long process that requires a great deal of effort and analysis. The following is a very general guideline. Items of great importance will be different based upon the business being considered for purchase. Size, structure, industry, competitive set, product/services offered will greatly influence your areas of concentration.

FINDING A BUSINESS TO BUY

 

Selling a Business

Businesses are sold for all sorts of reasons. If you’re considering the sale of your business, ask yourself the following questions: What do you want for yourself, and for your employees, as conditions of the sale? Are there any family members that might be interested in continuing the business? Is there the possibility of an employee buyout? Do you want to work for the company after the sale? Are you ready to retire, or is there something else that you would like to do? Could you report to someone else? How much of your self-esteem is tied up with owning and running your company?

Thinking through the implications of a sale for you, your family, and your employees will go a long way toward helping you determine the type of buyer with whom you would be most comfortable, and what terms of sale you require?

Getting Ready to Sell

 

Effective Purchase or Sales Agreement

Finally, you will want to consider what is included in your purchase or sales agreement. This brief identifies 35 elements to consider.

Contents of an Effective Purchase or Sale Agreement

  1. Decide whether it will be a stock or asset sale transaction.
  2. If an asset sale, define the assets. Keep in mind that there could be intangible assets such as software licenses. Do not forget deposits with utilities or other prepaid expenses. Make a list of assets as an appendix to the purchase/sale contract.
  3. Define the liabilities. Even in an asset sale there can be liabilities such as accounts payable and vacation/holiday accruals.

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