Raleigh Estate Planning and Corporate Law Attorneys

Business Law

Why You Need A Business Succession Plan

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If you’re a small business owner, you may have had a conversation with a loved one about business succession planning. Your loved one asks you if you’ve thought about your plan for the business and business succession. You make a joke that you don’t plan on going anywhere any time soon. If you’re one of the many small business owners who has had this conversation, you’re not alone. 

There are lots of reasons that small business and family-owned business owners don’t like to talk about business succession planning. Maybe you think it’s too far off in the future. Maybe you’ve put your life’s work into your business and talking about succession is just too painful. There are lots of great reasons that you should have a business succession plan. Here are our top eight: 

1. Unexpected life events can happen at any age

Major life events can happen to you or a loved one at any age. No matter how much you plan for the future, you just never know what might happen tomorrow.

Creating a business succession plan can protect you if you or a loved one has a life event that leaves you unable to tend to your business. Succession planning before you need it puts you in the driver’s seat. You don’t have to worry about an event that leaves you unable to control your business’ destiny. Instead, you’re prepared for any possibility. 

2. Your business can continue smooth operation

When you have a business succession plan, you’re able to ensure that your business doesn’t have any hiccups during the transition. As part of your planning, you gather financial records, valuation data, inventory and even client lists. Even information for day-to-day operations can be critical to gather in order to keep your business running smoothly in the future.

For example, passwords, bank account information and even IT information can all be critical to prevent business disruptions in the future. Succession planning helps you think of all of these details as part of the planning process. 

3. Business succession planning ensures a fair transition on your terms

You can get a better deal as you exit your business if you have time to plan. With business succession planning, you can use buy-sell agreements to establish prices, purchase terms, the value of each share and even who can purchase an ownership interest in the business. It can take time to find a buyer willing to pay. Planning ahead gives you time to consider how much retirement income you need and what your goals are in retirement. 

4. You ensure the right people inherit your business

Your business is personal. It may be your life’s work. Pre-planning for business succession gives you time to step back and think about who you want to inherit your business. 

If you expect family members to take over, it’s important to start having those conversations now. You should speak with family members in depth about their commitment and their goals for the business. Your loved ones may have different interests and priorities. They may need the training to run the business successfully.

The sooner you have these tough conversations, the more time you have to ensure that the right person takes over and continues to make your business thrive. 

5. There’s time to make a deal

A successful business deal takes time to negotiate. Even if an option looks great, when you start to iron out the details, the deal can fall through. It may take several tries to get the right deal in place.

Business succession planning gives you time to try again if the first plan doesn’t work out. It gives you time to explore contingencies and make sure that you’re getting a fair deal and fair terms for your business. 

6. Due diligence can help you get a better deal

When you start to look at the details of your business, there may be things that potential buyers don’t find flattering. There might be changes to make, issues to address and things to put in order in order to make your business more attractive to potential buyers.

Starting your business succession plan now gives you time to make adjustments to ensure that you get every dollar that you need and deserve when it’s time for retirement. 

7. Planning can minimize tax burdens

Planning for business succession now can help you avoid surprising and burdensome taxes on down the road. A professional business and estate planning attorney can help you look at business succession planning as part of an overall estate planning strategy.

There are things that you can do now that can reduce your tax burden later on, as well as things that you can do that make the transition logistically easier when it’s time to transfer ownership of the business.

Thoughtful planning can make things so much easier on down the road. Qualified legal advice can help ensure that you look at all the important considerations in your planning. 

8. You have peace of mind that you’re leaving a legacy

Your business is your life’s work. You want to leave it in the right hands and look back on it with pride. Business succession planning at any stage gives you the peace of mind to know that your business is in good hands. In addition, succession planning helps the ones that depend on you also have the confidence to know that their future is in good hands. 

Business succession planning

Business succession planning doesn’t mean announcing a retirement date. Instead, it means taking steps to protect you and your loved ones as well as establishing an exit strategy that’s on your terms and for a fair price when the day comes.

Taking steps for business succession planning now can keep you in control and protect your family. Our experienced team can make business succession planning a key part of your overall retirement and estate planning strategy.

Preparing To Sell Your Business In 2019

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selling your business

A new year often brings change. If you’re a business owner, 2019 might mean selling your business. If you want to sell your business in 2019, there are things that you should do in order to protect your interests and go about it in the best possible way. Doing the right things can help you get top dollar for your business and make the sale as smooth as possible. Here are 10 things that you should know about preparing to sell your business in 2019:

1. Prepare the paperwork for your business sale

Smart buyers want to see the paperwork for your business. They rely on the paperwork when they first make the decision to explore buying the business. They also rely on your documents when they make the final decision to close the sale.

One of the first things that you should do when you decide to sell your business in 2019 is put your business paperwork in order. The sooner you get started, the more time you have to address any questions that might arise. Having your paperwork prepared and orderly is the first step to finding enthusiastic buyers and getting a great sale price.

This generally includes several years of statements for all your bank accounts, credit cards, copies of customer contracts, and more.

2. Learn how to value your business for the sale

To get a fair price, you need to know what your business is worth. Different types of businesses use different valuation methods. You need to learn about the various business valuation methods like profit, assets and cashflow. The more that you know about how to value your business, the better you can justify your asking price.

Also, research the different types of business sale (asset vs stock), know the differences and how they affect your valuation.

3. Perfect your sales pitch

You need to be prepared to market your business. It’s important to think through how you’re going to communicate to potential buyers that your business is a great investment. Even if your business is sound and a great opportunity, you still need to convince buyers that they should jump in with both feet. Use the start of 2019 to think through how you’re going to market your business to potential buyers and convince them to buy your company.

4. Pick your team

At least some of your employees are going to know about the possible sale of the business. You’re going to rely on them to help you prepare documents at the least. Think through who you want to know about the sale of the business and why.

Think through who’s best suited to help you work on selling the business. Remember that your employees may have strong opinions about you selling the business, and they may have lots of reasons to want a particular outcome. Decide who’s best to help you prepare documents and work towards your goals.

5. Prepare employees for your business sale

There are some important considerations for employees when you sell your business. The buyer may want them to have non-compete and non-disclosure agreements so that they can’t jump ship as soon as you sell. Your attorney can help you prepare the agreements that you need to make sure that your team can continue to help your business now and into the future.

6. Think through answers to tough questions

Your potential buyers are going to ask you difficult questions. Now is your chance to think through your answers. Preparing to sell your business in 2019 means thinking through how you’ll address unflattering points and weaknesses in your business.

7. Be prepared to open up about lawsuits

One of the things your potential buyers want to know about is outstanding litigation. They want to know if you’re suing anyone and if you’re being sued. A lawsuit isn’t necessarily a bad thing, but you’re going to need to explain what’s going on and what your position is in each matter.

8. Gather specifics about top clients and vendors

If your business depends on one client or a few top clients, you can expect extra scrutiny from potential buyers about the business relationship. They want to know that your relationship with your top client is solid. They want to know that your top client is still going to be there after you sell the business.

Be prepared to open up about the nature of your relationship with your top clients. Potential buyers are going to ask a lot of questions about the business you do with major clients and how secure your business relationships are with clients that are make-or-break for your business. Having this information ready to go for potential buyers can show that you’re knowledgeable about your client base and confident in your business relationships.

9. Be patient and wait for the right opportunity

The right buyer likely won’t come along in the first week of the new year. To do it right, it might take the entire all of 2019 to sell your business. Remember that selling your business is a marathon. Gathering the financials, finding the right buyer and preparing the perfect pitch all take time. If you’re in too much of a hurry to sell, you’re not going to get the sale price and terms that you deserve. While you wait, you can get your paperwork and other affairs in order.

Usually, the best time to sell your business is during the busy season. You should sell your business while you’re at a high point. Selling at a low point can mean not getting a fair price for your business. Be ready to wait for the right time to sell so that you’re in a good position to negotiate the right price.

10. Seek expert advice for your business sale

As you prepare to sell your business in 2019, expert advice from an experienced mergers & acquisitions attorney can be crucial to help you arrive at the right agreement. Wilson Ratledge can help you understand what you need to do in order to structure your paperwork in order to make a great showing. In addition, there are important legal agreements that should go into place even as you begin to negotiate the sale.

We can help you identify areas that you can work on in order to make your sale go smoothly, and can help you think through how you’re going to respond to points that might be unflattering. When it’s time to prepare preliminary documents, final documents or employee agreements, we’re ready to provide you with the expert advice that you deserve.

Selling your business in 2019

Selling your business can make 2019 an exciting year. Making sure that you’re prepared can help you command top dollar for the sale. It can help you avoid road bumps that may make the sale difficult. Ultimately, the right preparation can make your business sale the highlight of 2019.

What Is A S Corporation And How Can It Help My Business?

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business entity choice

If you’re a business owner or you’re thinking of starting a business, the type of business entity that you choose has a big impact on what you do. Choosing a legal entity for your business can impact everything from who can own the business to how you pay taxes. The success of your business can ride on choosing the right structure. Make the right choice, and you can maximize your profits and grow your company.

Whether your business is large or small, the type of structure you choose matters. There’s no right answer based on size, either. Even small businesses have a number of structure options that might be right for them based on the circumstances.

One of the types of business entities that you might choose is an S corporation. An S corporation is a type of corporation that has some special tax considerations that may be beneficial in some circumstances. But what is an S corporation?

What is a S corporation?

An S corporation is a type of business entity. An S corporation is a unique business structure that operates a lot like other corporations only with some special tax advantages. The most distinguishing trait of an S corporation is that profits pass directly to owners before taxes. Owners might choose to have an S corporation in order to enjoy the corporate structure of a traditional corporation along with the tax benefits that come with S-corporation status.

S corporations have been law since 1958. They’re legally considered a corporation with federal income tax that’s a lot like a partnership. There’s only one class of stock in a S corporation. All outstanding shares of stock have equal ownership interests and rights, and shares of stock may be voting or non-voting shares. Profits and losses are distributed in proportion to shares.

Is a S corporation a corporation?

Yes, an S corporation is a corporation. It’s just a special subtype of a corporation that gets some special considerations. An S corporation comes with all of the corporate structure that you expect from a corporation like articles of incorporation. Not all corporations are S corporations, but all S corporations are corporations.

How do I start a S corporation?

To start an S corporation, you must file paperwork with the Corporations Division of the North Carolina Department of the Secretary of State. You must pay the state filing fee and file Form 2553 with the Internal Revenue Service. All corporations need Articles of Incorporation that explain how the company is going to be structured.

What makes a S corporation unique?

An S corporation gives you the benefits of a corporation in terms of corporate structure, but it gives you the benefits of a limited liability partnership or a partnership when it comes to taxes. Unlike other corporations, an S corporation doesn’t have double taxation. That is, the corporation itself doesn’t pay taxes. Instead, the owners of an S corporation pay taxes on the profits the business makes.

An S corporation is beneficial in that owners can take advantage of the things that help corporations succeed while they also maximize profits to owners by avoiding the double taxation that happens with traditional corporations. Shareholders must report income on their individualized tax returns through a Schedule K-1. The income is taxed at each shareholder’s personal tax rate.

You might be thinking that S corporations sound great and that everyone should incorporate as an S corporation in order to save on taxes. It’s not always that easy. In order to incorporate as an S corporation, the business must qualify.

An S corporation is governed by the laws of the state where it’s organized. Generally, an S corporation may have only a limited number of shareholders. The number can be quite high, with as many as 100 shareholders allowed in an S corporation. No non-resident aliens may be shareholders, and other corporations and partnerships are ineligible to be shareholders.

An s corporation may own a subsidiary s corporation. Trust and estates may also own shares of a S corporation. Non-profit organizations organized under IRS code 501(C)(3) qualify to own shares in a S corporation. Spouses are treated as a single shareholder.

What are the benefits of a S corporation?

The primary benefit of an S corporation is that unlike general corporations, business profit isn’t taxed before it’s passed onto shareholders. In that respect, an S corporation is a lot like a partnership. However, S corporations also have the added benefit of a corporate structure.

Corporate structure allows the corporation to continue to operate without much interruption when owners come and go. In addition, articles of incorporation provide structure or how the business operates. A S corporation continues in perpetuity until the corporation’s representatives actively take steps to end it.

Where do laws for S corporations come from?

Laws for S corporations come from both state and federal law. IRS laws determine how an S corporation pays federal income taxes or how they’re exempt from income taxes. Federal law also decides what form you have to file and in what time frame to file in order to have special status. Federal S corporation regulations come from Internal Revenue Code sections 1361-1379. The state the corporation is in also makes the laws for how to file the corporate entity and how to comply with periodic reporting requirements.

A S corporation shareholder must pay themselves a reasonable salary

At first glance, it might seem like the best plan to keep taxes low is to avoid paying salaries to any shareholders who work for the S corporation. North Carolina law requires the corporation to pay the shareholders who work for the company a salary that’s reasonable. States and the IRS may even put extra scrutiny on S corporations in order to ensure that they don’t try to skirt employee taxation laws by avoiding salary payments to working shareholders.

Should I file as a S corporation?

A S corporation may be the right legal entity whether your business is large or small. It’s not the right entity in all situations, but the tax benefits can be lucrative if you qualify to operate as an S corporation. If you’re considering choosing the S corporation status, other business entities that are worth considering may be a general corporation or “C corporation,” a limited liability company and a partnership.

Because the business structure that you choose may ultimately have a big impact on your profits, your business operations and what you must do to operate lawfully, it’s important to weigh your options carefully when you begin a business venture. Wilson Ratledge can help you explore your options and decide which business entity is right for you.

10 Things To Know When Starting A New Business

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start business

Congratulations on thinking about going into business. Having an idea or a dream for a business is the first step. To get your business off and running on the right foot, there are a lot of things to think about. You may be overwhelmed by everything there is to do, or you may be wondering what you don’t know. Here are 10 things to know about how to start a business venture from our North Carolina business attorneys:

How do I start a business in North Carolina?

To start a business in North Carolina, you need to choose a business name. You decide on a business entity, and you register your business. You might register your business in your county, or you may register your business with the North Carolina Secretary of State. Once the Secretary of State approves your filing, you’re in business. Be sure to comply with tax laws, employment regulations, workers compensation and other regulations as you operate your business.

1. Choosing a business entity for your business

Not all businesses are created equal. The type of business that you choose determines how your business operates, how you pay taxes and whether you’re personally liable for the debts of the business. If your business is a sole proprietorship or a general partnership, you’re personally liable for the debts of the business.

If you start an LLC, your liability is more limited. You may also want to start a corporation or a non-profit. It’s important to consider the taxes, management structures, risks and potential benefits for each business entity in order to choose the structure that’s best for you.

In North Carolina, the filing requirements depend on your type of business. If you start a sole proprietorship or general partnership, you file with your county. For other business entities, you file with the North Carolina Secretary of State. In North Carolina, there are lots of business entities to choose from. You should carefully consider which type of business structure meets your needs.

2. How to choose a name for your business

Every great business needs a great name. When you register your business, you must be sure to avoid a name that’s already in use by another business. Just like your business has legal protections, other businesses have protections, too. Be sure to choose a name that’s available in order to avoid complaints from other businesses.

3. How to minimize risks as an employer

If you’re going to hire employees, there are a few special things that you need to do. You must comply with federal and state employment laws. There are laws that prohibit discrimination. You must follow wage and hour laws. Health and safety laws are also important when you have employees. If you have three or more employees, you need to purchase worker’s compensation insurance.

Beyond regulations, it’s important to think about what your business can do to minimize risks. You may be wise to implement training programs for employees. It may be a good idea to adopt official policies and a corporate handbook. Following official employment laws and identifying other ways that you can be a good employer can help you avoid problems before you hire your first employee.

4. How to protect your intellectual property in business

When you go into business, there’s a good chance that you’re going to have some ideas, designs and other works that you need to protect. Even your business name or logo may be worthy of a trademark. If you have an invention, you may need a patent. If you make creative works, you may need to brush up on copyright enforcement laws. Protecting your intellectual property is key to your business success. Learning about the types of intellectual property that may impact your business can help you protect the assets that can make your business thrive.

5. What kinds of contracts do you need to run a business?

Most businesses rely on contracts. You might have contracts with suppliers. You may have contracts with purchasers. You’ll also need insurance contracts that may include worker’s compensation.

In business, disputes are inevitable. A contract may not seem important until you have a disagreement. Determining when you need to use contracts in business and what they need to say can help you start your business on the right foot.

6. What government laws and regulations do I need to follow?

There are federal, state and local laws that apply to your business. You may need permits or a license for your particular business venture. Knowing the laws and regulations that you must follow is critical to avoiding bumps in the road. Identifying the laws that apply to your business can be a big task. An experienced attorney can help you determine what you need to do in order to stay on top of laws and regulations that apply to your business venture.

7. How do I raise capital for my business?

When you start a business, you must think through the finances related with running the business. You must determine how you’re going to get funding. Is your funding going to come from personal sources, are you going to take out a loan or are you going to find investors? How much do you need to make in order to break even? Thinking through the finances involved in starting and operating your business can help you make sure that you take the best steps to help your business grow.

8. How do I pay taxes for my business?

Your business must pay taxes. If you sell anything, you need to register to pay North Carolina sales tax. Employers must pay unemployment and employee withholding taxes. When you start a business, it’s important to understand what taxes you need to pay and how you’re going to pay them.

9. What else do I need to know?

When you’re in business, it can be hard to know what you don’t know. An experienced North Carolina business attorney can help you identify things that may create trouble for your business. A business lawyer can help you both avoid problems before they start and react if unexpected issues arise during your business venture.

10. What do I need to do once I’m in business?

Even once you’re in business, there’s important work to do. You need to file an annual report with the North Carolina Secretary of State. You need to pay all of your taxes. It’s important to continuously asses areas where your business may need to make changes in order to thrive. The team at Wilson Ratledge can help you start your business in the best way possible and identify ways to help your business thrive. Fill out our online form or call us today to schedule a consultation about how to get your new venture started off on the right foot.

What Are The Most Commonly Used Business Valuation Methods?

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business valuation methods
Selling your business is a serious undertaking. You need to agree on terms of the sale. You also need to agree on a selling price.

When you’re ready to sell your business, you might immediately wonder what your business is worth. There are several ways to value a business. It’s important to understand the most commonly used business valuation methods so that you can choose the right one for your business.

Choosing a valuation method for your business

Valuing a business is an art. It’s not a science. Business valuation methods vary based on the type and size of the business. There are several different methods, and they can produce wildly different results.

Ultimately, your goal is to agree on a purchase price with a potential buyer. When you settle on a business valuation method, it’s important to be able to justify your choice. Here are the most commonly used business valuation methods:

Business Valuation Method – 1. Profit Multiplier

The profit multiplier is a business valuation method that looks at the profits that a company makes over a period of time. First, you determine the company’s profit or their gross income minus expenses. Once you arrive at an annual profit, you multiply that amount by a multiplier that you determine. The result is the value of the business.

For example, say a business has an annual gross income of $500,000 per year. They have $350,000 in total expenses including supplies, rent, employee salaries and more. They make $150,000 each year in profit. To value the business, the owner applies a multiplier of 3. The total value of the business using the profit multiplier method in this example is $450,000.

How do you choose a multiplier for your business valuation?

A critical question in the profit multiplier valuation method is settling on a multiplier for your case. Multipliers can range from two to 12. Because there’s a big range for possible multipliers, the multiplier that you choose can make a big difference when it comes to the value of the business.

A small business might use a multiplier between three and five. A large, public company typically uses a multiplier between seven and 12. The reason for the difference is that a large, publicly-traded company likely has more growth potential than a small business. The profit multiplier method assumes that the business is going to continue to make the same profit in future years.

Considerations for the profit multiplier valuation method and a small business

When you apply the profit multiplier valuation method to a small business, there are some special considerations to keep in mind. A small business might operate out of the owner’s home. That can help the business save on rent. If the cost of rent isn’t factored into the business valuation, the value of the business can be too high using the profit multiplier method.

Similarly, a small business owner might not take a salary. If someone buys the business, they may have to pay an employee to do the work that the owner used to do. To create an accurate valuation estimation, it’s important to account for a salary for the owner. An accurate profit multiplier valuation has to consider and account for unique circumstances that may be present in a small, closely-held company.

Business Valuation Method – 2. Comparables

Another way to value a business is by looking at sales of comparable businesses. To use the comparables method for selling a business, you find similar businesses that sold recently. You compare their selling prices in order to determine the value of your business.

There are both pros and cons to using the comparables method. The comparables method has merit in that it looks at actual sales of real businesses whereas other valuation methods may be purely speculative. However, the comparables method is based on similar businesses, but no business can be exactly like the one that’s being valued for a sale. Even differences that seem small like location or assets can make a big difference when it comes to placing an accurate value on a business. In addition, there may not be enough examples available to use effectively, as most small business acquisitions do not have publicly disclosed terms. The comparables method may result in comparing dissimilar businesses, but it’s based on real sales rather than estimations.

Business Valuation Method – 3. Discounted Cash Flow

The discounted cash flow method of valuing a business projects future cash flow and discounts it to current-day values. The discounted cash flow method is similar to the profit multiplier method, but it reduces the total amount to present-day value in order to account for inflation. To use the discounted cash flow valuation method, you estimate cash revenues and deduct expenses. Once you determine your profit margin cash flow, you apply the appropriate multiplier. Finally, you reduce the amount to a present-day value. The result is the estimated value of the business.

Business Valuation Method – 4. Asset Valuation

Another method to determine the value of a business is the asset valuation method. Unlike other methods that focus on incomes and profits, the asset valuation method looks at all of the physical assets of a business. A business might have real property, fixtures, machinery, electronics and other tangible assets. All the assets are included in the asset total for the business. Then, you deduct debts from the value of the business. The total market value of your assets minus debts is the value of the business.

The asset valuation method must address depreciation. An object loses value over time. It’s impractical to appraise an item with the amount the company paid to purchase it. You need to rely on appraisals in order to determine the current value of an item. The asset valuation method is the most practical when a business has a large number of physical assets. Even though a business may not have many assets, they might have a large client base. It’s important to consider the type of business that you have when you decide what valuation method to choose and what adjustments to make.

Business valuation must be reasonable based on the true circumstances

When you’re selling your business, you want the selling price to be as high as possible. It’s important to work carefully and thoroughly when you perform a business valuation. You must be able to justify your methods to the person that you want to buy the business. You might use only one business valuation method, or you might use multiple methods. Ultimately, an accurate business valuation can help you find a willing buyer and determine the right sale price.

Eight Things To Know When Selling Your Business

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Selling your business

When you’re selling your business, you want to negotiate the best terms of sale possible. Usually, that means the best selling price you can get. It’s important to know the right questions to ask and things to consider when you prepare to sell your business. Here are eight things that you should know when you sell your business:

1. The value of your business

In order to sell your business for a fair price, you must know the value of your business. There’s no single rule for determining the value of a business. The value of your business depends on your income, debts, profits, physical assets and even reputation. You might use several different methods to determine the value of your business like profit multiplier, comparables and asset valuation.

Ultimately, it’s important to be able to justify what you ultimately decide is the value of your business. Expert appraisers can help you value your business objectively and accurately. You should document what you rely on for your valuation in order to share the information and discuss it with potential buyers.

2. How you’re going to divide the work during sale negotiations

It’s important to avoid putting 100 percent of your efforts into the business sale. You still have a business to run. If high-level employees put their effort into the business sale instead of running the business, sales might drop. Prospective buyers who notice the drop in sales might immediately demand a lower sales price.

Of course, negotiating the terms of the sale is going to take some time. It’s important to designate who should focus on the sale and who should focus on continued business operations. The sale of a business can take months. Remember, your business sale is a marathon and not a sprint. It’s important not to allow the sale negotiations and preparations to overshadow the continued efforts of running your business.

3. Terms of negotiation

Determining the terms just for negotiating a business sale is an effort all of its own. Before you can negotiate the terms of the sale, you must agree on the terms of negotiating the sale. You should prepare a letter of intent that defines things like confidentiality, exclusivity, due diligence, the exchange of information and a potential penalty if the deal doesn’t materialize. While a letter of intent is preliminary, it’s critically important to your business whether or not you ultimately end up making the sale. A letter of intent can protect your interests as you explore whether to make the sale.

4. Current financial information

The buyer is going to want to see your financial information. The financial information is also part of placing an accurate value on the business. As you begin preparations to sell your business, it’s important to get your financial records in order. You want to gather income statements, balance sheets and tax returns for several years.

Getting your records together as early as possible can help you deal with any questions or discrepancies that you find in your books. If there are errors, you must reconcile them. A potential buyer is going to look through your financial statements. If they notice errors, they might demand a lower selling price or refuse to continue sale negotiations. Beginning to compile your financial statements early gives you the upper hand and time to consider how you’re going to respond to unfavorable information.

5. The weaknesses of your business

Every business has their inefficiencies and vulnerabilities. It’s important to identify them so that you can respond to them as questions come up. A potential buyer is going to look at the weaknesses of your business and use them as a way to try and lower the sales price. Brainstorming what issues the buyer is going to raise allows you to think through how you can minimize negatives and defend your proposed selling price.

6. Your financial plan after the sale

If you own a business, you likely rely on the business for your income. As you negotiate a sale, you should take the time to plan through your future finances. You may continue to work for the business as an employee. You may continue to draw a salary as a consultant for several years after the sale. You might rely on the sale price for future income. It’s important to have a plan for your financial future so that you’re personally ready to sell your business.

7. How much debt you have

As you prepare to sell your business, it’s typically a good idea to minimize your debts. A high amount of debt can scare a potential buyer and lower the selling price. Identifying your debts and doing what you can to minimize them can help you raise your selling price.

8. Whether you plan to offer seller financing

Business sales often rely on financing. If you’re selling your business, you might consider financing the sale for a buyer. Of course, that’s not a decision to make lightly. You must be in a financial position to finance the sale. You must also make sure that the buyer is financially sound and likely to fulfill the terms of the sale. Because sales with financing typically sell at a higher amount than sales without financing, whether to offer to finance the sale is a serious question. While you can ultimately raise your selling price, it’s only a good idea if it makes financial sense under all the circumstances.

What you should know when you negotiate your business sale

When you decide to sell your business, there are a lot of things to know. You need to know what your business is worth. That’s typically a question that requires some investigation. You must also know how you’re going to continue to operate your business while you negotiate the sale.

Agreeing on terms for the negotiation is also a critical part of ensuring that you’re protecting your business during sale negotiations. When you negotiate the sale of your business, it can be hard to be impartial. An experienced business law attorney can help you identify potential issues and help you negotiate your business sale in the best way possible.

To schedule a consultation to find out more about the process of selling your business, call us today at 919-787-7711 or fill out our contact form.