If you are thinking of selling your business, then this is an excellent spot to begin. One will possibly ask you this question – “have you thought this through? ” The first question you would undoubtedly need to ask is “how much can I get for the company?
The answer to your question is determined by how well you have thought it through because there are pitfalls. This short article will open your mind to some early essential pitfalls that can affect both the sale price and your ability to sell.
You must first assess exactly what you are selling. Have you been a sole-trader where all responsibilities on you?
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Is this a partnership – Are partners involved have a monetary interest who will need to approve the deal? Or is it a private company – Are there other stockholders to contemplate and will every shareholder wish to sell?
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One could also be thinking about the sale of a public limited company – in which case is it possible to get all investors to sell and are there particular interest to take into account?
In each scenario, there are problems to address from the onset that may stop a potential and send the buyer away without looking back.
If selling a sole-trader business, you will need to be mindful of warranties that are implied. These can be, undocumented assumptions that the customer could be making when buying the business. One obvious one is that the business can function when the owner already sold it.
If this proves to be not the case then in some specific conditions the buyer of the business can claim their money while keeping the company. Therefore, good preparation vital.
With partnerships and private limited companies, the crucial problem is understanding: are all shareholders and partners entirely in agreement since a change of mind halfway can adversely affect the process.
There are specific individual concerns which should be addressed where partnerships and private companies are involved, which will likely need a lawyer.
To some extent, a deal involving a public company is much easier, but it also depends on how much of the business the client wants to acquire. If this is 100 %, a prior agreement of all shareholders will be needed but getting it has to be undertaken carefully to prevent charges of insider trading and share value distortions.
Unscrupulous customers may want to take advantage or intentionally support, disarray the seller’s team to push the company to the edge so as to reduce its market value or force a liquidation to their advantage.
Agreement of all selling parties is thus essential clearly lay out the value of the business and the minimum price that can be acceptable.