Selling Your Business Properly

Selling a company can make the current owner of that company rich. In many cases, a company is sold for two or more times the amount that it makes in a single year or two years. If your business made $1 million in the past year, it could be sold for as much as $2 million or $4 million if it is sold for double the amount of two year’s worth of earnings.

Get Your Information Together

The first step to selling a company is to make sure that you have all the information needed to make a pitch to a buyer. This means that you need to have sales information, projected profit or loss for the year as well as information regarding all current debt that the new buyer would have to take on. In addition, information about any fixed assets that the company has should be revealed to potential buyers as this could increase the value of the business.

Asset Deal or Stock Deal?

If your company is going to be purchased, it is a good idea to know how the deal is going to be structured. In the event that your company is going to be sold as a stock deal, you need to make sure that you are lowering your tax burden as much as possible. Typically, a long-term investment is taxed at no more than 15 percent if sold 12 months or longer after it is purchased.

Will You Stay on as an Employee?

Will you be offered a position within the company, and would you want to stay within the company if offered a position? It is not uncommon to see a former business owner accept a position as a top executive within the company because that person has knowledge or connections to the community that have value after the company is sold.

Be Patient During the Process

The sales process can take months or years depending on the complexity of it. Therefore, it is critical that you are patient throughout the process and take all steps to ensure that is completed correctly. Otherwise, there could be tax or regulatory issues that could kill the transaction.

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