Buying or Selling a Business – Tips from an M&A Attorney

The RocketLawyer Press posted a guest blog post from yours truly today with some tips to consider when buying or selling a business.  You can find the entire post at this link.  In the article, I give a brief overview of some M&A options, a few legal considerations, and a few practical considerations.  M&A work is something I really enjoy.  Check out the post and shoot me a message if you have questions.

Selling Your Business? Here's a Checklist (Part 1).

In my M&A Law Practice, I work with clients who are selling a business all the time.  This can be an exciting and stressful time for business owners - and often times they become overwhelmed by the process.  In addition to the legal advice and services I provide, I always try to help them the other aspects of this process.  Below I have created a simple checklist of the things I usually share with business owners to help them wrap their mind around the process of selling a business.

Some Practical Considerations

1. Make sure you think through the reasons you are selling a business.  This may sound obvious, but there are lots of implications to selling a business.  Are you tired of the business?  Do you want to retire?  Do you want to remain involved with the business, but just need/want the capital from the sale?  All of these sorts of things should be considered when working with your M&A attorney and other advisers in determining the terms of the sale of the business. 
2. Is this a "family business" in which your children or other family members have an interest or expectation of long term involvement?  Sometimes people sell off a closely held business without considering the options of keeping the business in the family for future generations.  While this might not be a possibility or option for some, it is something I always recommend people give some thought to.  There are ways to step away from the a business, generate passive income, and still hand it over to family.
3. Is finding the right buyer important to you?  A business owner who has spent years building a business might often be reluctant to sell the business for fear of a potential buyer not maintaining the business in the vision of its founder.  Some business owners don't care about this - but if you do - finding the right buyer for your business becomes very important.
4. Determine what you want to get out of the sale of your business before you begin negotiating terms.  Don't let a buyer dictate the terms when you sell a business. Before you begin the process, put a great deal of thought into what you want or need to get out of the sale. Use that as the primary driver as you negotiate terms.  For people selling a business out of desperation, this might not help things all that much - but still - it is important to remember why you are selling your business as you work through the details.

Check back soon for  a checklist of some legal stuff you should add to your checklist when selling a business.

Buying and Selling a Bar - Attorney

Owning a bar. At some point, whether it be while watching Cheers or hanging out of the local pub, most guys envision how cool it would be to own a bar. The camaraderie. The chance to be "that guy" that owns a bar. People who own bars, though, will tell you that it is a rough business. First of all, it is a cash business by nature. Bar owners are constantly worried about employees skimming off the top - although the commonplace use of credit and debit cards has minimized that to a degree. Bar owners also are forced to deal with the unique liabilities arising from selling alcoholic beverages.

All that being said, a bar is a lot like any other business, and bars are bought and sold as businesses all the time. The sale takes place just like any other sale - by selling assets, selling stock, via merger...etc. One of the unique aspects of selling a bar is the disposition of the liquor license. Typically a liquor license / permit is issued for a particular location and to a particular business entity. Any time the ownership of the bar business changes (whether through an asset sale or a stock sale), the approval of local and/or state regulators will be required in order to transfer the license. In Indiana, for example, the approval of the Alcohol and Tobacco Commission is required. This process can take time, sometimes up to 3 months (or more). Many times the buyer of a bar will want to operate the bar in the interim period while the approval is taking place. This is a very tricky process since legally the buyer of the bar may not sell alcoholic beverages until the license has been transferred from the seller.

One way to accomplish this is via a management agreement that allows the buyer to "manage" the bar during the time when the license transfer is being approved. It is important that this agreement is done right and in accordance with applicable laws. Something important to keep in mind - if the assets being sold include existing inventory of alcoholic beverage, title to the inventory should NOT change hands until the license/permit transfer has been approved.

Mergers and Acquisitions Attorney - Methods of Selling a Business

Buying or selling a business is not like buying or selling a car.  This "business" consists of the assets and equity of the business, along with the various ongoing liabilities of the business.  The assets can include physical assets, as well as intangible assets such as intellectual property, contractual rights and the goodwill the business has developed over time.  When you buy or sell a business, it typically means that some or all of the foregoing will be transferred.  There are many ways to do this.  I have outlined a few over at IndianaStartup.com - check out the post on buying or selling a business.  

The process is very complicated - and is best accomplished with the help of a Mergers and Acquisitions Attorney.