S7 W4 E13-16 Preparing to Sell Your Business - The Entrepreneur’s Edge with Bill Kelly

The Entrepreneur’s Edge with Bill Kelly
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Expert Advice on Buying and Selling a Business on the IBGR.Network ...The World of Business at Your Fingertips

Week 4, Episodes 13-16,  Preparing to Sell Your Business 

Welcome to week 4 of the Entrepreneur’s Edge with Bill Kelly

Quote of the Week: “Nobody can go back and start a new beginning, but anyone can start today and make a new ending. –  Maria Robinson Author and Inspirational Speaker 
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Week in Review: Thanksgiving week, listings and buying activity remain strong.  

Episode 13 Why do Some Businesses Sell Quickly while Others Never Sell?
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Setting realistic expectations on the sale of your business.   

1. Start by asking yourself if you are selling a money-making system or a job?
   
   
   
2. Most Job Based Businesses are bought by either a First Time Buyers or Strategic Buyers. First Time Buyers are looking to gain more control over their financial future in an industry they have experience in. Strategic Buyers usually already have a successful business but want to acquire more cash flow, a larger territory, additional products or services, or key customers, and  employees with experience in their industry.
   
   
   
3. Job Based Businesses often require more time for the Broker to find qualified Buyers and educate them on the business’s past performance and future potential. They will usually require more time finding financing and may require mor Seller assistance after the sale.  
   
   
   
4. Strategic Buyers usually know what they are looking for and generally may close faster. They already know how to run a business so their Due Diligence list will be more detailed. 

Tags: Selling a Business, Business Brokers, Strategic Buyers, Selling Your Job, Franchise Model, Buying a Business, Transworld Business Advisors  

EPISODE 14 What is Included with The Sale of My Business?
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The Seller sets the terms of the sale, but the Buyer has the final say.   

1. When selling your business consult with your business broker to decide the terms you want for the sales of your business. Terms include items such as: personal property you retain, payment for receivables and inventory, key employee retention, length of Buyer training you provide after the sale, and more.
   
   
   
2. Generally, when you sell your small business, the cash on hand and receivables belong to the Seller at closing. However, in some cases the Buyer will insist on leaving enough working capital to maintain the business after closing. Work in process is usually included with the sale but is always negotiable. Inventory is usually purchased by the Buyer and may be handled in a separate sales agreement. 
   
   
   
3. Personal Items always remain the property of the seller. Other business assets, such as personal vehicles, small equipment, tools …etc. can be carved out of a sale agreement before closing. Let your Broker know about these items as soon as possible.
   
   
   
4. Valuing and receiving payment for receivables can be tricky. In most cases it is best to discount the value of receivables to allow for their safe collection and have the Buyer purchase them at closing.
   
   
   
5. Other terms like key employee retention and length of time you allow for Buyer training after the sale are negotiable, but again, always let your Broker know if these issues as soon as possible.    

Tags: Selling a Business, Business Brokers, Included with the Sale, Buying a Business,  Transworld Business Advisors  

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Episode 15 Do I Need to Sell my Corporation with my Business? 

Usually not, but it may be necessary. 

1. There are two issues to consider when deciding whether to sell your business corporation or just the assets. What is the tax impact on both the buyer and seller, and what are the assets being transferred?
   
   
   
2. If the company is an S Corp or LLC, the tax benefits to the Buyer favor an asset sale. But if the company is a C corporation, the Seller may face double taxation when selling the assets, so a stock sale may be more favorable. 
   
   
   
3. In some cases, the assets being sold might be difficult to transfer, such as government contracts, certifications, and distributorships for example. In these cases, a stock sale may be required.
   
   
   
4. Buyers may inherit additional risk with a stock sale. Risk for past events such as underreporting taxes, sexual harassment lawsuits, and unreported contracts can pass to the Buyer. For these reasons and more, Buyers often prefer to buy the assets of a company.  Of course, a good lawyer can limit the risks transferred in a stock sale.
   
   
   
5. Regardless of the risk, if your company has a large number of contracts, vehicles or licenses, the buyer may insist on a stock sale.
   
   
   
   

Tags: Selling a Business, Business Brokers, Stock Sale, Asset Sale, Business Sale, Transworld Business Advisors 

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Episode 16 Should I Consider Giving the Buyer a Seller’s Note? 

If I do, how will I know I’ll get paid?

1. A Seller’s note is an alternative form of capital. It’s really a loan from the Seller to the Buyer to help finance the purchase of the Seller’s small business. The Seller agrees to loan the Buyer a portion of the purchase price in exchange for a series of payments usually with interest. 
   
   
   
2. A Seller note is usually used to close the gap between the purchase price and the amount of bank financing available. SBA loans often permit the borrower to include some or all of a Seller’s note when calculating the Buyer’s capital contribution to the transaction.
   
   
   
3. This type of loan can also be used to give the Buyer more confidence when purchasing a business with challenging characteristics such as a concentration of a few high dollar customers or perhaps a seasonal concentration of business.  
   
   
   
4. When securing a Seller’s note, it is always recommended to get the Buyer’s personal guaranty and make sure they have other assets outside of the business as collateral.
   
   
   
5. Talk to your Broker to discuss various types of Seller’s notes that can be used to the Seller’s benefit. Also, talk to your CPA about the tax benefits involved. 
   

Tags: Selling a Business, Business Brokers, Business Marketing, Business Sales, Business Brokers, Transworld Business Advisors

Short Bio: Bill Kelly is a Senior Business Broker and Franchise Consultant for Transworld Business Advisors of Richmond, VA, and  a Licensed Virginia Commercial Real Estate Agent. Bill has been a lifelong Entrepreneur and has personally started/purchased and sold eleven businesses. He lives in Richmond, Virginia, with his wife Rebecca, and two daughters, and one granddaughter. 
   
Contact links: bkelly@tworld.com

Social Media:     Facebook: https://www.facebook.com/BillKelly1955
        LinkedIn: https://www.linkedin.com/in/billkellyprofile/
Website:     https://www.tworld.com/agent/billkelly/

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