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Fast Track Your Sale: How to Sell a Business Quickly and Avoid Expensive Missteps!
Selling a business can be difficult. In fact, it may be one of the most difficult things you can take on as a business owner. According to one study,...
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Sunbelt Marketing
:
Aug 11, 2010 12:00:00 AM
Whether you’re selling or buying a business, it can prove to be daunting task. Because there are certain procedures you must follow and documents you must complete, in most cases, it’s vital that you seek the help of an intermediary that specializes in buying and selling. They will be able to guide you through this overwhelming process.
Generally, the purchase or sale of a business will be in the form of one of these:
Asset purchase – Where the buyer purchases some or all of the seller’s assets. Buyers like this form of purchase because they often receive equipment and inventory, without taking on the seller’s debts and various liabilities.
Stock purchase – Where the buyer purchases all or most of the seller’s stock. This purchase is beneficial to the seller because the buyer assumes all of the seller’s debts and liabilities.
Merger – Where two companies unite to form a single, brand new company. This transaction is favored by both the buyer and the seller because it usually entails a tax-free swap of stock in the new company for stock of the old or “merged” company.
It’s a smart idea to get an intermediary involved in the process, as early on as possible. The process of buying and selling is often too difficult to deal with by yourself.
Here are some things you should know and discuss with your consultant before negotiations with the other party starts:
In this stage, the buyer and the seller should discuss the following matters:
Letter of intent – (written during preliminary negotiations) Shows that the parties are serious about the deal. It helps make sure that they don’t waste time and money performing due diligence and negotiating a formal agreement. Usually, they’re “non-binding,” though, you can’t force the other party to buy or sell based upon the letter.
Due diligence – (also done during the preliminary negotiation stage) it is an in-depth examination of all the aspects of the seller, such as their liabilities and assets. The point is to make sure that the company is truly legit, and proves to be everything it says that it is.
A formal agreement is what ends the negotiations. The formal agreement contains all the details of the deal, including the price, the date when the business will be turned over, etc. Often, the agreement goes through many drafts, and it’s not finalized and signed until the closing stage.
These are the things that should be addressed during the pre-closing:
Closing is when the deal is completed. This is a paper-intensive process. At this time, you’ll have to do things like:
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