If you’re thinking of selling your business, there are many issues you must consider first. Three things you must ask yourself are: “can my business be sold?”, “am I ready to sell?”, and “what’s my business worth?”. If you can confidently answer these questions, you should be ready to start the process. Here are some things you will need before entering the market:
• Profit and loss statements for the prior years
• Year to date profit and loss statement
• Current balance sheet
• Tax returns from the prior years
• List of inventories
• List of furniture, fixtures, and equipment
• Lease agreement or commercial property appraisal
• Numerous other documents depending upon the type of business
It is also important to note that a business can be sold in different ways. You can sell the assets through an asset purchase agreement. You can also sell the stock or membership interest in the business. The method of sale can have different taxable consequences.
You may also be asked to produce insurance policies, employment agreements, customer contracts, lists of patents and other intellectual property, equipment leases and bank statements. Even if you are not currently considering selling your business, it is important to keep these and other documents filled and organized.
A potential seller of a business also needs to understand the need to protect documents and other information that may be released to a potential purchaser. Not all people are honorable and they may just desire to learn information and use it for an alternative purpose. An attorney can help with the protection of the information.
Once you have found a buyer who is qualified, it is time to ask that an offer be presented. This can be offered through a letter of intent or a term sheet. The primary terms of the deal should be fully detailed and spelled out so that all parties can successfully move forward in a professional manner.
If selling your business is the right exit strategy for you, please contact the law office of Craig M. Dorne, PA located at 3132 Ponce de Leon Boulevard Coral Gables, Florida 33134 or call (305) 531-7890.