12 Questions to
When You Are Thinking of Selling Your Business This Year
8 Tips When You Have Made the Decision to Sell Your Business
1. There are a larger number of uncertainties that are coming with the new health care reform. How will the changes affect the profitability of your business, and should you sell before any negative affects arrive?
2. Government regulations continue to be imposed at increasing depths for all businesses. Will increased regulations affect your business over the next few years and sour the milk for a future buyer?
3. New taxes, or cuts in deductions, will happen. If changes in the tax code will negatively affect your cash flow, or the cash flow of your customers, should you sell sooner than later?
4. Tax for capital gains is currently at 15%. When the Bush tax cuts expire the rate will move to 20%. There is discussions the rate could be moved to 30%. This could mean as much as $150,000 in additional taxes for a $1 million transaction. Since a business buyer will not offer a purchase price for the current business value + your increased tax liabilities, should you sell before taxes are increased?
5. Financing is available for financially sound transactions. However, many potential transactions are not completed due to a lack of financing. Are you familiar with the funding sources who will consider financing your type of transaction?
6. An optimal employment rate that would increase demand for products and services will not occur for a number of years. Can you wait for increased demand until the economy is fully recovered?
7. Included in the new healthcare act is a new property tax. If you are selling the business so you can retire, or invest in other opportunities, what is the total effective tax you can pay and still net enough cash out of the business to meet your desires?
8. Thousands of baby boomers are retiring each day and many of these have businesses they will be selling. Will an influx of businesses for sale reduce the chances of selling your business at top dollar?
9. There are countries that are major players in the global markets that will be having economic difficulties for many years. If your company’s profit hinges on global trades, how will your business valuation be affected if you wait to sell?
10. Many buyers will request that you carry part of the
financing. Are you familiar with carrying and selling a business
11. In a good economy you should expect that selling your business will take 6-12 months. How long will it take with the current economic conditions?
12. Is selling now, or waiting to see what happens, the best strategy to maximize the purchase price of your business?
8 Tips for Preparing to Sell Your Business:
1. The various taxes you will be required to pay will have a huge impact on how much you are able to deposit from the purchase price of your business. Work with a knowledgeable tax advisor to assist in the development of your best strategy.
2. Work with a valuation company, that is an expert in your industry, to determine the current value of your business. Don’t use simple formulas that might not meet the realistic aspects of your industry or geographic area.
3. Be prepared. It is amazing how many business owners don’t have their monthly financial statements and other reports up-to-date. Have at least 3 years of tax returns and monthly financial statements copied and ready so that a qualified buyer can begin their due diligence sooner than later.
4. Since most business purchases are financed, if you have received any type of business financing in the past, reconnect with the lender so that you can direct a buyer to a lender that knows your business and industry.
5. You can’t sell your business if the buyer doesn’t have an avenue to finance the transaction. If you don’t have a previous lender to direct a buyer toward, start working with finance consultants who have funding sourcesthat provide business loans in your industry.
6. You know “curb appeal” works for selling a home. Make sure your business property, equipment, and work areas provide an appearance that will attract the buyer.
7. Confidentiality can be a concern when sellers don’t want
their employees and customers to be in a position where they will fear the coming change. Use a business broker that has both experience and buying contacts in your industry. A broker with expertise
in your industry should be able to bring qualified buyers to the table without running public advertisements.
8. A quality business broker will also be able to bring in a higher purchase price than you can get by yourself. When you attend to the day to day activities of running the business and maintaining profits, while not diluting your time with attempting to broker the business yourself, you should net more money even after paying the broker commissions.
Business Funding Secrets provides business lending secrets, tips, and techniques for business owners seeking business loans and venture capital. You can access important business funding information when you subscribe today to the Business Funding Secrets Newsletter at: www.BusinessFundingSecrets.com
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