Selling a Business in Orlando – Contact a Commercial Business Transaction Attorney
Just as individuals purchase a business for a range of different reasons, a business owner may decide to sell his or her business for any number of reasons as well. Some owners sell because they simply want to retire. Some want to move onto new ventures. Some put their businesses on the market because of partner disputes or dissatisfaction with the daily grind. Some are forced to sell because of illness, while others are compelled to sell because their businesses are not profitable. Of course, if a business owner dies, heirs and benefactors may decide to sell a business for filial or financial reasons.
Selling a Business
When it comes to selling a business, the larger the business, the more complex the process can be. Unless you are the sole proprietor of an extremely small business and you simply want to sell it to a friend, a family member, or a current employee, trying to sell your business yourself may not be not a good idea for several reasons.
Foremost is the fact that the vast majority of business sellers are first-timers. They may be competent at their own businesses, but they are probably unschooled in the complexities of a business sale transaction. Another reason is that it can take six months to over a year to sell a business and that means a great deal of time must be devoted to the process – time most owners don’t have if they also want to continue running their enterprises successfully. And although it is estimated that 25 percent of American businesses change hands every year, only 20 percent of all businesses for sale actually sell at all.
To get a right buyer at the right price, you may need the services of a professional business broker to guide, advise, and lead you through the process. After thoroughly understanding all the pros and cons of your business, and investigating all of its financials, your broker will recommend a selling strategy that includes pricing and offering terms. Then he or she will prepare a marketing strategy, qualify prospective buyers for financial capability, experience and motivation, and connect you with the ones most likely to make an offer. Once an offer is made, your broker will work to structure the best deal possible.
Two other professionals you may consider relying upon are a competent accountant and a knowledgeable attorney. Your accountant will help you prepare your business’s financial records and advise you about tax issues, while your attorney will make sure that all contracts and transfers are well written and well understood. Your attorney will also help you design a confidentiality agreement so that would-be buyers can’t divulge any information they gather during the due diligence process, when they have access to all of your proprietary information.
Indeed, confidentiality is a key component of most business sales. Knowledge of a potential sale either by employees, competitors, customers or vendors can severely impact “business as usual” just at the time when a business owner wants to show off his or her operation at its best. And yet, a business has to be marketed, so complete secrecy is highly improbable. This can create a delicate balancing act for you and it’s another reason that you must have a business broker who can handle all of the selling details in a prudent and confidential manner.
Preparing Your Business for Sale
Unless the reason for selling your business is due to unforeseen circumstances, or otherwise unplanned, you should prepare for its sale well in advance. Preparation will help you improve your business structure, gather your records, and do whatever you can to make your business more appealing and potentially profitable to a new owner.
While you’re looking to get a top price for your business and the most cash possible at closing, a buyer is looking for value in the form of a sustainable company with a steady cash flow, historically good earnings, a stable workforce, and a strong customer base. So, you should time the sale of your business when it is in top operating condition. In Florida, 70 percent of business buyers are first-timers from other segments of corporate America; two percent are professional buyers; and 28 percent are investor groups and corporate acquirers. All of them hope to profit from their purchase in one way or another.
The Selling Process
You and your broker will meet with potential buyers. Some of them may make offers and some of them may not. You may accept an offer or make a counter offer. Once there is mutual acceptance between you and a buyer, you will sign a purchase agreement, outlining the terms of the sale. After the buyer signs a Confidentiality Agreement, you will be required to proffer all of your financial data, business records, tax audits, bank statements, inventory lists, corporate filings, schedules of debts and liens, and all other relevant documentation, so that the buyer can examine in detail if you have represented your business in a straight forward manner.
Upon the successful conclusion of the buyer’s due diligence, you and your team will engage in further negotiations with the buyer’s team to prepare all the necessary closing documents, decide on the terms of any seller financing, clarify how the transition is going to be accomplished, and settle upon all of the myriad details concerning employees, inventory, intellectual property, transfer of licenses and permits, vendor relations, current contracts with other entities, etc., etc., etc. In many cases you will be also asked to sign a non-compete agreement prohibiting you from engaging in a similar business after the sale is complete.
Most business owners who sell their businesses do it only once in a lifetime. So it’s important to get it right. Once you have decided to sell, find a business broker who is knowledgeable, experienced, and dedicated to fulfilling your needs and desires. In Florida, you should hire a member in good standing of the Business Brokers of Florida (BBF), the Florida Business Brokers Association (FBBA) or the International Business Brokers Association (IBBA). These professionals will help you achieve your goals by facilitating your business sale to the right buyer for the right price.
Consulting an Orlando Business Lawyer when Selling a Business
Selling business carries complexities. If you are considering or in the process of selling a business in the Orlando area, contact our office for a consultation.