Step 4 -Sell A Business: How To Structure & Negotiate The Sale

In Step 3 of the sell a business process we talked about finding and qualifying buyers up to the point where the most qualified buyers came to visit your business in person.

The next step was for buyers to submit their Letter Of Intent signaling their strong interest in your business and the fact that you and the buyer have agreed in principal on the price and terms that will make up the sale.

In this section I am going to get into the actual details that make up the sale and how to negotiate these details for your maximum benefit.

Specifically, here's what we will cover:

How To Structure Of The Sale Of A Business: When you sell a business there are two different legal structures the sale can take: an "Asset Sale" and an "Entity Sale". Almost all sales of truly small businesses (those with less than $2 million in revenue) take the form of the "asset sale". A lot of entrepreneurs are surprised to learn that when they buy a small business they are not actually buying the business - they are just acquiring a list of assets that make up the business. Sure, that list of assets may include the company name and the physical location. So to the customer it will seem like the exact same business.

But from a legal standpoint the buyer is establishing a brand new business entity. They'll just being using the "stuff" that made up your business to do it. In this article we will discuss how all that works

Also, we will discuss the most common types of agreements that can be included in the sales contract: Non-compete clauses, employment contracts and consulting agreements to name a few.

The Basics Of Financing The Sale Of Your Business: I am sure some of you will want to skip this section as you plan to sell your business for cash. And if you can find a buyer capable of doing that, great! But for the rest of you this is where we will go into a detailed a discussion of down payments, interest rates and the benefits of offering seller financing.

9 Ways To Protect Yourself When Using Seller Financing: How to set up the financing to protect yourself legally. Also, we discuss the importance of structuring the repayments in a realistic fashion so the buyer is actually able to make the payments.

How To Use Seller Financing To Make The Deal More Likely To Actually Happen Some advice about how to effectively negotiate the financing and other aspects of the sale so that you don't have to lower the selling price. Sometimes financing the sale can be a blessing in disguise because it forces you to negotiate on things other than price. As long as you are talking payment terms and interest rates you are not talking price discounts.

 

 

NEXT: How To Structure The Sale Of A Business

 

Last Updated on February 7, 2015 by

 


The Six Steps To Selling Your Business
Step 1 - Preparation  Step 2 - Valuation   Step 3 - Finding Buyers
Step 4 - Structure The Sale  Step 5 - Due Diligence  Step 6 - Closing

 

 

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