Get Your Ducks In A Row Before You Sell Your Business

There are a million reasons to keep or sell a business on any given day. If you find yourself asking, “Should I sell my company?” on more than one occasion, it might be time to consider a sale. Selling your business will have serious, life-changing implications. It is important to consider all of your options before you decide to sell, as well as the potential for unforeseen consequences. Once you have signed a sales contract, you don’t get to ‘unsell’ your business. You want to be sure that you are making the right decision when the time comes. Enlisting the help of professionals and asking yourself hard questions will help you feel confident in your decision.

There are several professionals that you will want to consult when you are considering a large dollar sum sale. First, talk with your financial advisor. He or she should help you with asking yourself the hard questions, such as whether you are indeed ready to sell, or if a break would rejuvenate your interest in the business. He or she might suggest bringing in outside management as an alternative to selling the business. Your business lawyer should be able to evaluate potential legal risks. A common clause in many business sales may preclude your from engaging in business within that sector for a specific period of time after the sale. A lawyer who specializes in business law should be able to draw up agreements for you that are standard in the industry and specialized to fit your situation at the same time. Finally, an accountant can help you understand what types of tax burdens you will face as you sell your business. In some cases, it may be advantageous to arrange a business exchange or sell at a different time than you had planned. As a rule, the best time to sell is when the business and your sales are peaking and the industry is likely to attract great interest, but from a tax standpoint, you may need to officially close the sale after the end of the current tax year.

Other issues to consider include the well-being of your employees and what obligations you may have to fulfill if the business sells. Current employees do not necessarily roll over to the new employer. If your business exit requires termination of salaried employees, severance pay and leave entitlements may require you to pay out more than you had intended. Some employers consider it good business practice to negotiate interviews for all existing employees when the business changes hands. While this is not common, it is a way to foster goodwill and important if you intend to open a new business within the same industry.