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Austin TX Business Law Blog

Sunday, March 31, 2019

Six Factors to Consider Before Selling Your Company

Selling your company can be a bittersweet experience. The business you worked hard to build has become a success, but it is time for you to move to the next phase of your career or life. Before you place your company on the market, you want to ensure you consider several factors, so that your company is ready to be sold for top dollar. An Austin business lawyer can help you during each phase of the business transaction, including discussing the initial factors below.

Six Things to Consider As You Prepare to Place Your Company on the Market

1.            Hire Advisors and Professionals Immediately

Even though you may be on the fence about selling your company, you may want to consider hiring advisors and professionals now to help you with all phases of the sale, especially if you have never sold a business before now. Legal and financial professionals can help you identify your strengths and weaknesses as you prepare to place your company on the market. Your advisors take care of the aspects of the sale while you continue to focus your energy on operating your business so that you can show potential purchasers a strong, growing company with fantastic potential.

2.            Determine the Value of Your Business

You need to research the fair market value for your business according to current market trends, supply, and demand. You also need to calculate the value of your business based on profit margin and business sales. Because many factors may significantly impact the value of your company, you may want to consult a business valuation professional. A business valuation professional researches all relevant factors and presents the market value in a detailed report you can share with potential buyers.

3.            Ensure Your Financial Records Are Ready for Inspection

If you do not have an outside accounting firm that handles your business records, you may want to hire one to prepare the financial records for review by prospective purchasers. A potential investor or purchaser expects to review your company’s financial records, including interim financial statements, tax returns, annual financial statements, operating plan, inventory, profit & loss, and other documents that demonstrate the strength of your company and your potential profits. Having these documents prepared by a reputable and trusted accounting firm can instill additional confidence in your company from potential purchasers.

4.            Status of Key Employees

One of the most valuable assets of a company is its employees. Depending on your company, your key employees may be one of the biggest selling points for a new buyer. A purchaser may want to guarantee that key employees will not leave after the company is transferred. Therefore, make sure that all records related to employees are updated and complete. Employee records you may need to review include employment contracts, independent contractor agreements, non-disclosure agreements, confidentiality agreements, separation agreements, and non-solicitation agreements.

5.            Protecting Intellectual and Proprietary Property

A potential buyer also wants to ensure that any patents, trademarks, trade secrets, and copyrights are protected. Therefore, review each application filed for copyright, trademark, patent, or trade secret to ensure that the application was approved and is in effect. You need to be prepared to answer all due diligence questions regarding intellectual and proprietary property protections for a potential buyer.

6.            Tax and Estate Considerations

Do not forget to consider how the sale of your company impacts your tax planning and estate planning strategies. Failing to incorporate your plans to sell your company into your tax and estate plan could result in substantial losses and tax liabilities.

Contact an Austin Business Attorney For More Help

The above six factors are a good place to begin if you are considering selling your business. However, once you begin the process of placing your company on the market, many other factors need to be addressed, and steps must be taken to protect your best interests. Contact our Austin, Texas business attorneys to help you keep everything focused and moving toward a successful business transfer.

 


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