Eight Key Steps to Selling Your Business
by
Attorney Fred S. Steingold
To sell your business, you need help negotiating the deal and creating a sales agreement.
Thinking of selling? Consider these practical steps for making the process go smoothly.
1. Determine a Realistic Price Range
If you price your business too high, you'll scare away buyers. If you price it too low, you'll lose out. To figure out a range that's realistic, you can use one of several methods -- and then maybe blend the results. For example, you can base the price on the value of the business's assets, and add in a sum for the goodwill the business has developed. Or you can see how much comparable businesses in your industry and locale have recently sold for. Or you can use an industry formula (for example, a value based on the number of units sold annually or a multiple of average earnings).
2. Understand the Tax Consequences
Taxes can take a huge bite out of the money you receive for your business. It pays to know just how big that tax bite will be -- and to try to lower it, most likely with help from a CPA or other tax expert.
Your tax bill will be influenced by two key factors: How your business is legally set up and -- in the case of a corporation or LLC -- whether you're selling the assets or the entity. Sales of all sole proprietorships and almost all partnerships are asset sales. So are the sales of many corporations and LLCs.
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