A Legal Guide To Selling Your Business Successfully
Selling your business is a huge decision, and one of the most stressful decisions too. This is even more true if you have to sell your business because you have no other choice. There are so many professionals involved in selling a business but involving a commercial lawyer is mandatory in this kind of deal as there are many legal documents to prepare and points to consider. The sales team should include a lawyer as well as a professional accountant. There are so many factors to be taken into consideration when selling your enterprise. This article provides a guide to the legal issues involved and how a lawyer can help selling your business successfully.
The first step of selling a business is to determine a realistic price range for it. When the price is too high, you definitely scare away buyers. If it is too low, you lose in the end. Basing the price on the value of your business assets is one way of computing a realistic price for it. You can take into consideration the sum of goodwill the business has developed up to now into this equation. Look for the prices of your competitive enterprises that were recently sold. If not, you can create a formula such as the number of units sold annually and arrive at realistic price for your business . A business broker can give you a guide but your accountant will also need to be involved as the selling price will be determined by the long-run profits which you will need to show to prospective buyers.
The tax component can eat away into your profits of selling the business. Get the help of a tax expert in order to lower the adverse effects that you may have to face due to the tax component. The tax bill can affect your business in two ways. It will differ on how your business is legally set up. In case it is a corporation or Limited Liability Company, it will depend on whether you are selling the assets or the entity. These are some of the important aspects that should be cleared before you decide to sell the business.
Getting your numbers in good shape is essential in selling your enterprise for the best possible price. You should recast your tax return numbers for the prospective buyers. You may add back to your profits miscellaneous expenses such as medical expenses for you or your family, business vehicles, subscriptions, memberships, salaries or bonuses that were paid to family members and travel or entertainment expenses. This doesn’t mean that you are deceiving the IRD or the prospects, but showing the buyer that they could refrain from spending money on some of these items in the future. A well-known business will not have to struggle in order to find potential buyers. If your business is relatively unknown, you may have to market it more. You will have to use trade magazines and other important sources to advertise your business. Also, use “business for sale” website for this purpose. You can seek the help of business brokers in this regard, but may have to pay out a substantial commission in the process.
Next comes the negotiation process. Negotiate with the buyer on what you plan to sell and how you plan to do it. The presence of your lawyer and financial expert is essential during such negotiation processes. Put the deal in writing. The lawyer will help you succeed in this aspect. The agreement should list the assets and value the buyer is purchasing among other things. It should include payment schedule for the business as often businesses are paid for in instalments. These need to be clearly stated plus any penalties for late or non-payment.
There will also be documents to prepare for the transfer of leases on premises, vehicles and equipment where relevant, employee records to be produced and sent to the IRD and contract appendices for the transfer of inventory, customer records and even the ownership of the website. There is a lot of work that your lawyer needs to do in the selling process so make sure you hire an experienced commercial lawyer, McVeagh Fleming is one in Albany to help with the sale of a North Shore business.
This article has provided an extensive overview of some of the aspects of selling a business and brief explanation of some of the legal issues and how a North Shore lawyer can help selling your business .
You can get more information from their website http://www.mcveaghfleming.co.nz/.