you’ve reached the end of the road as a business owner and are looking to move
on, or have reached the point where you can “cash-out” and reap significant
rewards from a business sale, the process of selling a business can be almost
as tricky to navigate as starting your dream business was in the first place.
addition to knowing when to sell, there are many decisions to be made and
obligations to be met – from structuring your sale, to finding a buyer,
managing regulatory ties and commitments, inventorying assets, transferring
ownership, and so on.
are some tips and resources to help you understand some of the key aspects of
getting your business ready for sale.
Preparing for a Business Sale – Make
Sure your Business is in Good Shape
factors play a huge role in the process of selling a business and much like
selling a home, getting your business ready for sale requires planning and
preparation. Just as you might keep your home freshly painted and your lawn
neatly trimmed in the run up to a sale, you will also want to make your
business looks equally attractive to a potential buyer.
the old adage “what you put in is what you get out”.
in a down economy, keeping your business in ship shape condition with sustained
sales and marketing efforts can help you position it for a quick and strong
sale when things start to pick up.
dichotomy is that when things do start to pick up, many entrepreneurs are
hesitant to back away from their business as they enjoy a boom time, the
consequence being that they often reject potential buyers, only to regret their
decision when their business takes a downward turn.
this “Planning your Exit”
guide the Small
Business Administration (SBA) offers small
business owners tips and advice to maximize the value of their business while
developing a “getting out” plan. It also includes a checklist of items
(including obligations to your employees, partners, property managers, and so
on) that should be considered as early in the process as possible.
Before the For Sale Sign Goes Up – Understand your Tax
from market conditions and the health of your business, another area to
consider before selling up is the tax ramifications of doing so.
sure as eggs are eggs, the IRS will take a large share of the money you receive
from a business sale. A CPA or tax expert can help you understand what to
expect in this regard but, as a rule, the structure of your business will
influence this number. For example most corporations, LLCs, partnerships, and
sole proprietors are asset sales – and the IRS typically treats each of these
assets separately for determining gain or loss.
Setting a Realistic Asking Price for
might be the first aspect of a potential business sale that keeps your mind
occupied, but deciding upon a realistic asking price requires research, market
insight, and oftentimes expert intervention. Trying to determine the worth of
your business is not easy and, while sale prices typically depend on profit
values, it is often best left to the experts to determine a fair market price.
An appraiser or a business broker can help. The latter can even help guide you
through a confidential sale and screen prospective buyers.
SBA offers a variety of guides to help you make sure the price is right, help
you find a buyer, help get seller financing, and much more. Read them here.
Understand how to Close Your Business
Legally – State and Local Regulatory Obligations
addition to taking care of your federal tax commitments (refer to this Closing a Business Checklist from the IRS) you will also need to check off several
state and local government regulatory requirements associated with selling a
business. These include but are not limited to:
“doing business as”
Filing forms with
your state for the dissolution or cancellation of a partnership, LLC, or
The cancellation of
any permits or licenses you hold with your county or state
final employee tax forms such as payroll taxes, withholding reports, etc.
local Commissioner of Revenue about your changed business status
Read “What Steps Must I Follow to Close My Business
Legally?” (www.legalmatch.com) to learn about the five steps you need to take to
legally close your business and check your individual state requirements here.
Get Help from these Resources