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Crucial steps when starting the business sale process

On Behalf of | Dec 15, 2017 | Buying & Selling Businesses |

North Carolina business owners generally want the most money possible from the sale of their companies. To determine whether an offer accomplishes this goal, it is important to first have the company appraised. Ideally, the appraiser will be licensed and accredited, and whoever provides the valuation should be a neutral third party. By getting an estimated fair market value before putting the business on the market, it may provide an opportunity to make it worth more.

As an appraiser will have access to a sensitive financial and other data, this person should sign a non-disclosure agreement. Buyers will also need to sign this document, but they may be apprehensive to do so. Therefore, it is important to craft the agreement in such a way that a buyer can use insights gleaned from the purchase process without harming the seller’s business.

One of the most important terms to understand when selling a business is Earnings Before Interest, Taxes, Depreciation and Amortization. This equation may provide the clearest picture of whether a company can be profitable now and in the future. To arrive at this figure, simply deduct expenses from total revenues before accounting for taxes, depreciation or other variables. When done correctly, it should show an accurate picture of a company’s current cash flow situation.

As a general rule, the sale of a business is a complex process. However, it may be possible to make this process easier by consulting with an attorney. An attorney might reach out to appraisers, financial professionals or others who may be relevant during a business sale. Legal counsel may also be able to help put together a sale agreement or assist if disputes arise during the sale process.