Selling Your Business: What to Know

businessman shaking hands with his client

Risks and Issues to Watch Out For Selling a Business

Most people hearing about a business focus primarily on what it might take to start one. This isn’t surprising; much about modern business today references entrepreneurship and startup elements as well as those great success stories that turn into huge investment rewards or exponentially-growing companies. However, what doesn’t get as much fanfare but is far more important for many business owners involves when it’s time to sell the company. For those in the area, help from a business attorney in Bucks County PA can be critical.

Unlike a car or a home, selling a business can often be a bit more complicated, even for a practiced business attorney Bucks County resource. That’s because the buyer is not only buying the existing business in terms of what it is worth at that moment, they are also buying what the business may be worth in the future given its current direction and developments. Obviously, a currently successful business has at least a viable price point, but businesses that have a promising invention, idea or service can be just as valuable if not more to buyers who want to take over or own that possibility.

Selling a business can also come with hidden minefields too, according to many a business attorney in Bucks County, and it’s the seller’s responsibility to watch out for these risks. They can include:

  • Sale timing – A variety of issues can affect timing, making it good or bad. Obviously, selling a business in bad economic times essentially loses money and could end up being a fire sale. On the other hand, selling the company when its product or service or industry is very popular could be smart. Watching the overall industry is worth the trouble before actually listing a business for purchase.
  • Deviating Price from the Appraisal – An independent appraisal of the business sets the parameters on what a company is probably worth from a practical perspective. Setting a price to far above could end up fouling the sale altogether, especially when a buyer’s appraisal says otherwise. Have your own appraisal done first to know what the ballpark is before pricing.
  • Consider a Broker – Unless a seller really understands all that is involved with selling a business, a broker is a smart way to go. Many will ignore this fact and try to sell on their own, only realizing later how much time it takes. Instead, by using a broker, an owner and focus on finishing up the business and working on a new investment instead.
  • Keep the Paperwork Straight – A business sale depends on clean and organized paperwork. That includes tax returns for up to five years, financial statements, any independent audits, and an inventory of all known assets. Ideally, the package should be prepared by a certified accountant. Not doing so will likely destroy a sale when it matters most.
  • Vet the Buyer – There is a tremendous amount of activity, particularly online, operating fraudulent operations and scams, and businesses are high value targets. Many trying to get access to financial accounts to simply sap anything liquid and then disappear. So make sure your prospective buyers are fully vetted and identified before getting into financial details about the business for sale.

One of the best ways to handle the sale of a business safely is to utilize help from a Bucks County business attorney. Olen Law has been practicing and representing clients for years in major business transactions, including company sales between parties. A Bucks County business lawyer like Olen Law can provide all the necessary due diligence as well as provide key guidance on what missteps to avoid. This is particularly helpful for owners going through a business sale for the first time. Yes, one could try to sell a business without a business lawyer Bucks County resource involved, but the potential headaches that then occur tend to make it not worth the trouble. Start your business sale off right. Call Olen Law today.