When a business exchange is taking place, it’s quite common to see the buyer and the seller spending their energy, almost fully, negotiating price.
It’s understandable – the bottom line of any transaction we make will always be the dollars and cents. Whether you’re listing a business for sale or listing a single item on Kijiji, you’re going to always have the profit as the most important facet of the transaction.
With a business, however, there are other issues at hand that will often be ignored and proper strategic planning will fall by the wayside. The so-called “smaller” issues that get pushed off to the side, however, can often be difference between making a deal happen or it falling through.
Selling a business , as has been said before, is unlike any other transaction. There are so many factors to consider that will get pushed to the side in the name of getting the best dollar value or completing a transaction quickly. These issues, however, do require your attention as part of planning for a sale, so as not to get tied up in legal matters in the future.
A few of these factors include:
– Date of close – Will the sale date come during a hot season for the business and potentially disrupted workflow? If you’re selling a landscaping business, for example, will the close date come in February, before the busiest booking days take place, or will it be in September when the fall rush starts?
– Training – Is the new owner ready to enter as soon as the payment clears or will there be a transition period where they learn the ropes from the seller?
– Previous owner retention – Related to the point above, how long with the selling owner stick around to easy strategic planning issues and pass on knowledge as the new owner (and potentially new staff) get their feet wet in the new company?
– Key employees – How can the buyer ensure they stay? Will the aforementioned transition help in retention or will it allow those important staff members have time to search the market for a new position?
– Representations & Warrantees – Will these be honoured? Will there be a grace period before the new owner phases out any guarantees?
– Financing – Will the seller help finance the transaction? If so, how much and what collateral (if any) will the seller take?
– Transaction structure: Is the former owner retaining any shares or receiving a royalty? Are there other shareholders (even the most minor) who will be affected by the transaction?
– Length of time for due diligence & removal of other conditions – Is there a deadline for all the I’s to be dotted and T’s to be crossed? What is the possibility of the deal being nullified if something is picked up amid the due diligence stage?
This is just a quick list of some of the key issues which can wind up being deal-killers. Knowing them and having an understanding about how they impact the overall deal are keys to having a successful transaction. To learn about other issues that should be considered as part of a business sale, or help with any contemplated transaction, call the business sale experts at Beal Business Brokers and Advisors (204) 478-7266 or fill out our contact form .