Don’t Take The Decision To Sell Your Company Lightly
We have all been there: that day when everything goes wrong, you’ve already worked an 80-hour week and one more machine breaks down, one more key employee tells you that he or she is moving on, one more quarter comes back in the red. You begin to ask yourself, should I sell my company? As tempting as it may be at the end of that long day, don’t make this decision without considering all the implications and possible scenarios.
Taxes
The single largest implication for most people who are considering selling a business is taxes. In most cases, those who are selling a business will want to minimize their tax burden, possibly by participating in a 1031 exchange. This type of tax-deferring exchange requires the employment of a qualified intermediary, a person who specializes in dealing with 1031 exchanges. These professionals know the specific laws that pertain to reducing tax burdens and can guide you through the process. It is a good idea to consult both a qualified intermediary and your regular accountant to make sure that you will reduce your tax burden as much as is legally possible. When discussing this matter, the purchase of another similar property will defer your tax liability the greatest amount, often wiping away anything that you might presently owe. If this is the case, carefully consider before making the exchange. If you are trying to get out of the business entirely, then your options to minimize your tax bill are more limited. However, it is important to visit with your CPA concerning this issue. In many cases, the manner in which the purchase price of your business is allocated can have a significant impact on your net dollar position after the sale and taxes. In some cases, realizing your net cash position after the sale may result in a reconsideration of a decision to sell and other alternatives need to be explored.
Utilizing An Expert
A professional who is experienced in selling businesses will help you work through the tough decision that you are making. It is not worth wasting their time or yours if you are only half-hearted in your conviction to sell. Once you have made the decision to sell, an expert in the field can assist you in making the sale run smoothly and quickly. No one wants to be dragged through months of marketing their company followed by no sale or long, drawn out negotiations. Utilizing an expert’s services will help you get through the process with the least amount of stress on you, while helping you create greater value for your company.
If you only have one business to sell, you need to make sure that you do it right. There are a lot of hard questions when it comes to deciding whether to sell your property. Direction from your attorney, your CPA and a qualified intermediary can all be to your advantage and help you make sure that you are making the right decision.
