Many people start businesses with the goal of eventually selling them so that they can retire early. To get the most benefit from a sale, owners should ensure that their company is as valuable as possible to interested parties.
Some of the ways to increase the value include ensuring that the business is optimized to increase profits rather than to offset taxes, that books are normalized and that essential employees will stick around. When a business is optimized to offset taxes instead of maximize profits, potential buyers are likely to only focus on the low profits, and this can reduce a business’ selling price.
Normalizing books means refactoring records to exclude costs that aren’t normally associated with running a business. For example, large purchases upgrading equipment aren’t the norm, so they shouldn’t be factored into the normal day to day expenses. Finally, incentivizing existing and important employees to stay will keep a buyer from having to spend a lot of money looking to replace key staff.
When an owner does get around to selling their business, a lawyer may be able to help them through the process. It’s important that people set up a sale so that it provides them with the most benefits and that they understand their obligations related to the sale to avoid legal trouble. Depending on how a sale is set up, an owner may be obligated to provide the buyer with a list of current clients, information about how products are created or pay off all liabilities. Therefore, owners should have legal representation to make sure that their interests are protected.