You've poured time, money, sweat, and love into building your company. Now, you’re ready to sell your business and reap the benefits of all your hard work.
The right business purchase transaction can sell your business at a profit while the wrong approach can leave you worse off than you’d hoped. Although your business is a professional venture, building something from the ground up makes for a personal and emotional undertaking. Most business owners feel some pride of ownership over what they’ve accomplished – and rightfully so, as building a successful business is anything but easy.
You must do your due diligence before you sign away your business rights to someone else. The last thing you want is to have your hard work stripped from you without proper credit or compensation. You want to make sure all the important issues have been considered and addressed before the ink dries on your business purchase agreement.
The best way to protect your interests in a Philadelphia-area business sale is to hire a local business lawyer to help with the process. Your attorney can help:
Preparing to Sell Your Business
The process of selling your business can be time-intensive, emotional, and filled with ups and downs. A business lawyer can help make the process go smoother from the beginning. Starting on the right foot can position you for the best success.
First, you should establish why you're selling your business. Any potential buyer will want to know and the answer will set the tone for your negotiations.
You can show documentation to prove:
It's never too early to start planning to sell your business if that's your ultimate goal. The sooner you get started, the better you can develop your business strategy, record-keeping practices, customer engagement, and management operations to that end.
Valuing Your Business for Sale
Business negotiations start and end with price. How much do you sell your business for?
A prospective buyer will approach you with a Letter of Intent (LOI) that includes their offered price. How you respond depends on how you value your business.
When it comes to appraising the value of your company, accuracy is key. Pricing too low can cheat you out of the profits you deserve while pricing too high can derail the deal.
Valuation involves looking at both the intrinsic aspects of your business and any relevant extrinsic factors out in the world. When valuing your company, you must consider:
Your lawyer will help assess your situation and make the best decision that matches your goals. While a business broker can help find a buyer for your business, your legal team makes sure your interests are represented in your business purchase agreement. That means drafting the terms of your agreement according to the outcome of your negotiations.
Other Considerations for Selling Your Business
Selling your hard-built business to someone else can be a challenge, not to mention an emotional experience. If you're closing your business and selling your assets, you may not care who buys them as long as the deal is quick and profitable. But if you care about the company continuing your vision, you may want to sell only to someone you trust. This is especially true if you expect to enter into a partnership or shareholder agreement under the terms of the sale.
You may have a buyer in mind already – maybe even an employee who’s ready to take over for you. When it comes to buyers outside your company or industry, you should investigate their background as much as they evaluate your business.
Ready to get started? Call Holmes Business Law today at 215-482-0285 to talk to a Philadelphia lawyer about your options for selling your business.
Sarah E. Holmes is a Philadelphia business attorney and strategist that helps start ups and established businesses looking to expand, protect their assets and increase their profits in an approachable, down-to-earth way. When you're looking for a business lawyer in Philadelphia, the Main Line or New Jersey, we can help.