Selling a Business

Find out what a business sale or share sale would mean in your case, including the benefits, issues, costs, and taxes involved. Conduct a realistic valuation that considers the likely buyer and how they would finance the purchase. Without these insights, the valuation cannot be realistic.

Unrealistic strategies and valuations can easily ruin the chance of a sale. Large buyers are rare, and the likelihood of one coming along is low. While lottery wins do happen, most people spend their time waiting for such an opportunity.

Remember that buyers usually have other options, including not buying and continuing as before. Sellers typically have only one product to sell, so they must act wisely and patiently. Unrealistic demands can tarnish the reputation of the business permanently. 

A business broker's valuation is based on realistic sale possibilities. If a sale doesn't happen, the broker doesn't earn. Therefore, brokers aim for realistic valuations. They also benefit more from higher sale prices, motivating them to find the best possible buyer willing to pay a premium.

The length of a sales contract isn't inherently important, but as a rule of thumb, if it's shorter than six pages (or longer with widely spaced lines), it likely lacks crucial details for a safe and successful sale.

Consider what happens if the purchase price isn't paid or the sold equipment doesn't work. Examine each clause and ask what to do if the agreed terms in the contract aren't met. Additionally, you should be reasonably sure that at least all the most important points are documented and that you understand what they mean in practice.

Additionally, you should be reasonably sure that at least all the most important points are documented and that you understand what they mean in practice. The buyer has a duty to investigate, and the seller has a duty to disclose. There is no consumer protection in business sales, and it is ineffective to claim later that you did not understand the contract. A good sales contract prevents disputes in advance and guides actions in case of surprises.

The signing date of the contract and the transfer of ownership date are often not the same. Before or during the transfer of ownership, inventories may be conducted, which can adjust the purchase price.

Once ownership has changed, it's essential to genuinely step back and give space to the new owner. This applies even if there's an agreed transition period where the seller remains available for a certain time. The transition period is important, but true takeover happens when the business is fully in the buyer's hands.