Business Sales Forms
Business Sale - What You Need to Know
Sale of a business must be conducted properly in order to be profitable. A business sale can be of two types: asset sale and goodwill sale. In an asset sale, a seller sells some or all of a company's assets. Here, the seller cannot prove the company's profit, and it is sold as it is. On the other hand, in a goodwill sale, a company is sold after screening its sales and profit.
Every entrepreneur speculates about disposing his/her enterprise at some point in time. Major reasons pushing an owner to get rid of his commercial organization include personal exhaustion, knowledge of having reached a peak, medical problems, strong buyer interest, an unstable economy, interest in a different business opportunity or upcoming franchise opportunities, or sometimes feelings in the business owner of being ready for new challenges or even retirement.
The sale of a commercial enterprise is generally not a sale of a single asset. In fact, in such a sale, all the assets or possessions of a commercial entity like its building, vehicles, real estate, computers, office furniture and other fixtures are sold. In order to determine the gain or loss of each sale, each asset is generally sold independently.
Every sale necessitates the drafting of a business sale agreement fulfilling all statutory requirements. The agreement for sale should enumerate the rights and liabilities of both the vendor and the purchaser and must fulfill all statutory requirements. Preparation of a document for a business sale is a primary step in this endeavor. There are some more important steps that you need to ensure before buying or selling a business unit. They are:
- valuing the company,
- obtaining tax advice,
- doing adequate market research,
- checking out for initial offers,
- negotiating with the seller,
- having in place a sale and purchase agreement,
- fulfilling due diligence, and
- implementing the sale.
Whatever the reasons behind a sale of business, one would agree that a company making a profit has more value. That being said, even a commercial organization that is not making any profit has some value. In order to understand how profitable a business is, it is better to utilize the services of an independent and impartial valuation firm. Proper valuation will help facilitate sale at a reasonable and fair price, under just terms, and in the owner's paramount interest.
For proper valuation when you sell a business, one must know:
- 1. Selling prices of similar entities sold in the previous year or two;
- 2. Important value drivers for businesses in the industry;
- 3. Business brokers focusing on particular areas of commerce; and
- 4. Earnings before interest, taxes, depreciation and amortization.
When you sell a company, keeping the sale confidential is necessary for maintaining stability within the company. Confidentiality helps to prevent panic about job security among the employees. Additionally, confidentiality eases and simplifies the transaction between buyer and seller, and engaging a broker is the ideal way to ensure and sustain confidentiality.
Technology has influenced all facets of our life today and a commercial sale is no exception. There are many popular websites that aid you when you sell or buy business. Both business buyers and sellers, whether looking to sell or buy a business- can use the services of such sites. Such sites provide platforms for selling or buying small to mid- size businesses. These sites provide a wide range of business opportunities and business services. The sites are immensely helpful to business buyers, especially as they also provide opportunities within a franchise for sale. If you are in the market looking to buy a company/franchise, these websites have useful listings of businesses for sale that might include franchises for sale, convenience stores for sale, gas stations for sale, restaurants for sale, dry cleaners' stores for sale, or even a vending machine for sale.
These sites also offer small businesses for sale or even a company for sale. Most of the sites are generally customer friendly. Therefore, if you are looking for a business for sale by owner, or to sell your business for a great price within a reasonable time period, putting up your business for sale on the Internet might get you the best results.
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Business Sale FAQ
What are the different types of business sales?
A business sale may be an asset sale or a stock sale. In the case of an asset sale, the owner sells ownership of company assets, including goodwill. The buyer obtains the assets of the business, including buildings, without assuming its liabilities. Sometimes, in asset sales, the seller retains the cash and receivables. In a stock sale, the entire balance sheet, assets and liabilities are transferred and the buyer acquires all assets of the company, including cash and receivables.
What are the points to be kept in mind by buyers before they buy a business?
Commercial buyers must be diligent in every phase of the buying process. The buyers must review the sales agreement in detail to make sure it outlines the terms they have agreed to. All documents necessary for the transaction must be carefully reviewed. You may want to use the services of legal counsel to review the documents. Before purchasing a company, a buyer must determine the value to know if the value paid for the purchase is justified. For this, it is advisable to employ the services of a valuation firm, which has relevant expertise and experience, and will guide you in the right direction.
Who is a business broker?
A business broker is a person who acts as a link between buyers and sellers and assists buyers and sellers in the buying and selling process. They chiefly work by networking with individuals who might be interested in the same areas. Brokers help buyers and sellers in the estimation of value of the business that is to be bought or sold, and they may also assist in the advertising of the business for sale. Business brokers also help in the preparation of the paperwork necessary for the business sale, which could be a lengthy and complicated procedure.
I have a vending machine for sale that I would like to post on a website. What are the points to be kept in mind before making an online business sale?
These days online business sale is getting popular. Websites catering to online buying and selling of various products and services, in general, are mushrooming everyday. Such sites provide an immense business opportunity. There are many online advertisements for sale of products and services. Many websites provide online business opportunity and help you to buy business or sell a business. Several established online sites provide services around small businesses for sale, such as convenience stores for sale or gas stations for sale. Other small businesses for sale or franchises for sale may include small stores for sale or restaurants for sale, etc. Online purchasing and selling is very convenient, but there are pitfalls, and one has to be very careful while they make an online sale or purchase, and only deal with a trustworthy online store.
Sellers and buyers who sell or buy businesses benefit from the convenience and opportunities provided by sites like these. Sites like these also provide business opportunities which help in selling or buying small to mid- size businesses and also provide business services for franchise opportunities. When you plan to sell a company or franchise, you can use opportunities provided by a website that aid a business sale. You can often list in those websites if you have a franchise for sale, such as dry cleaners stores for sale.
Most of these sites are easy to navigate and are pretty customer friendly. In the case of a business for sale by owner, or if you want to sell your business at a profitable price, you can list on a website the details of the company for sale, its various assets, book of business, expected price, etc., and wait for a response.