Guide Selling a Business Common Seller Mistakes
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Sellers: Most Common Mistakes No Selling Pamphlet:
If purchaser decides to sue
the likely claim will be based on you failing to make full disclosure. If you
haven’t provided him with a Selling Pamphlet you have no way to show that you
made full and proper disclosure. Cost in legal fees alone will be $20,000 plus
- not including damages. His attorney would have taken the case on contingency,
knowing that you had an uphill battle and also have the money to pay a verdict. Bad Valuation To high and it most likely will not sell.If the buyer overpays and decides he wants out of the deal. You are in court.To low – you can figure that one out. No selling strategy: You should have multiple selling prices for multiple types of buyers. A purchaser who is making an investment is different than one who is going to actively work each day in the business. Failing to consider tax event: Is the money from the sale going to be taxed at the long term capital gains rate or the ordinary income rate. Per 100,000 the difference will cost you an extra $ 20,000. in taxes. Doesn’t it make sense to structure the deal to provide you the best tax advantages. Broker: It makes more sense to control the advertising and resulting contacts yourself. At the minimum it allows you to spend more dollars advertising your business for sale with the likely results of identifying multiple buyers. Many are experienced in selling real estate and have had absolutely no training or experience in selling businesses. Inexperienced lawyers and accountants: This is the toughest to protect yourself from because it is generally after the fact you find this out.
Of course, this is not a complete list of potential problems
but do not take these issues lightly and don’t be penny wise and dollar
foolish. Know when to seek help. We offer a Free Initial Consultation that can have profound results on your outcome. It would be a mistake not to take advantage of the opportunity.
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