If you are looking for a Business Attorney in Reno NV to assist with the sale of a business, Jerry Carter from the Sierra Crest Business Law Group has many years of experience working for both buyers and sellers of prospective companies.
When you are thinking about selling your business there are a few things that you have to get right. If you are trying to sell a business quickly then it is even more important to ensure you have a proper business legal counsel to protect your life’s work.
Getting Paid For Your Business
So let say you have determined what your business is worth and have found a buyer, you need to ensure that when the business sale is done, you get paid. The easiest way to get paid is to do the sale in all cash. Cash is king! More than likely, you are like most owners who sell, you have worked out a creative deal with the buyer to transition the business. Often this agreement is in the form of some type of payment terms over time. If this is the scenario you find yourself in, make sure that you’ve got some type of collateral against the deal. Your payment terms should be clear and enforceable. You want to know that if legal action is required you will be able to recoup any business sale proceeds.
A specific area to pay attention to is giving your buyer any chance to offset their payments. If he or she later complains about some aspect of the business. It’s always a good idea to run any business sale by an experienced attorney to ensure you get paid.
Providing Accurate Disclosure of Risk and Liabilities
Here is the second thing you have to get correct when selling a business. You need to make the appropriate disclosures of risks and of liabilities that are associated with that business. There are two reasons you do this:
First, you don’t want to be accused of fraud or deception later on down the road when your buyer stumbles on liabilities, that they didn’t appreciate beforehand. Second, you want it to be clear that the buyer is taking over those risks and liabilities when they buy the business. A good business attorney can ensure that when you deliver your disclosures and liabilities, you have can walk away with confidence, knowing there are no hidden surprises.
Clear Terms On What’s Included With The Sale
The third thing that you need to get, right, when you sell your business is you need to make it crystal clear what is included in the sale and what is not included in the sale. For example, if you intend to keep the accounts receivable, it has to be clearly stated in the sale. Also, there needs to be a cutoff date where you’re keeping accounts receivable up to a point and then the buyer takes over the accounts receivable. Once that date has come, if you’re keeping account balances, perhaps the money that’s in the checking account, that’s fine, but it just needs to be crystal clear in the documentation for selling the business.
These same principles also apply to real estate associated with the business. You may be in a situation where you own the building that the business operates out of. The building should be handled in a separate deal than selling the business. Everybody has got to know whether the building is included or not included.
Putting The Right Business Sale Team Together
The last thing that you have to get right when you sell your business is getting the right team together.
What does this sales team look like? First, someone going to have to value the business, someone going to have to work on the tax strategy, someone going to give you a legal strategy and guidance, and assist with the documentation. You can tell yourself, “I just won’t hire those people”, but that’s an illusion because in reality, when you say that, what you’ve done is hired yourself to be the expert in each of those areas.
You’ve hired yourself to be the tax strategist. You’ve hired yourself to be the business counsel, you’ve hired yourself to properly value the business. I encourage you to pay attention to who needs to be on the team and make thoughtful choices. If you’re going to wear the hat of one of those team members, you just need to be intentional and decide.
Do you have a good reason why you can wear the legal hat or the tax strategy hat? Be honest with yourself. If there’s not a good reason for you to wear the hat of one of the professionals, I would encourage you to find the right professional to take your place and get them working for you.
So in conclusion, the four things you absolutely need to get right when you sell your business are making sure you get paid, making sure you’re giving the appropriate disclosures of risks and liabilities, making sure that everything is crystal clear as to what is included in the deal. Finally, make sure you’ve got the right team to give you the legal, tax, and valuation advice you need to nail your business sale. If you have any questions, I’m happy to talk to you more about them.