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
- 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.
- 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.
- 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.
- 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.