Most small business owners eventually sell their business or because they have lost interest or they want to retire and have no heirs who wish to take the company over. Unfortunately, too many business owners wait until the last minute to get to their exit strategy. Doing so limits their options and often hurt their bottom line.
Preparing a business for sale to determine the optimal price should be started about 2 years before the actualThe sale will take place. Unless a buyer approaches "out of the blue" and put in an offer to buy the company, the seller really needs to mix things around dollars to get the absolute business .
Do not prepare the company for sale often leads to a business owner selling to someone who may not be best qualified to take over. It would not interest a professional seller if the buyer had a cash offer or was able to obtainoutside funding. However about 85% of all sales of small businesses require the seller to extend financing to the purchaser owner. If the business is sold to someone who is not qualified to own or manage the business, then the seller could get stuck holding a note that business is fundamentally worthless. Repossession Company May not be worth doing if the buyer has struck the ground.
"Joe the plumber" is a perfect example of someone you do not want to sell aBusiness booming at. Customers expect the owner / operator of a plumbing business contract would be a plumber, but "Joe the Plumber 'not a licensed plumber. Selling a business to someone without the proper license to operate the business is imminent disaster.
"Joe the plumber" is also behind on his taxes, and not something a seller should look favorably. If the person wants to buy your company already struggling with money,Why would any seller to extend credit? Any business note (owner financing) created under such situations is not easy to sell to a private investor if the need arose.
Another big problem with selling a company to "Joe the plumber" is that "Joe" is not his name. This may not look like a big problem on the surface, but on contracts that every buyer signs the seller really needs to ensure that the true legal name of the buyer is used. Contracts must belegally enforceable and that the seller should not allow the buyer to use something other than its full legal name. This is very important.
Emergencies happen, but business owners should consider their exit strategy from the moment the company is set if they want to get the wholesale price. The majority of all sales of small businesses require the seller to extend financing and sellers should be aware of all the same things that will hurt the value of the note iscreated.
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