Legal Mistakes That Business Sellers Need To Avoid
In the process of selling a business, sellers will encounter a variety of hurdles. Most of these relate to paperwork, proper business valuation, New York City‘s taxation system (which is far more burdensome than that of most US cities), among others.
The amount of work that needs to be done can understandably intimidate any business owner with no prior experience in selling a business.
The worst part is that skipping any of these tasks will potentially have the owner immersed in serious difficulties and his/her credibility will also get harmed along the way. For this reason, it’s very important to get acquainted with all the stages of the process.
MISTAKES THAT BUSINESS SELLERS NEED TO AVOID
Among some of the most common mistakes that sellers make and must be avoided, we include the following:
1. NOT HIRING PROFESSIONAL HELP:
In the process of selling a business, you would need to rely on the work of qualified professionals that can handle things such as paperwork, taxes, banking, and business valuation. NYC is packed with lots of options in terms of brokers, attorneys, real estate agents, accountants, and bankers to get your sale fast-tracked.
The amount of competition in all these fields should also ensure that you get affordable rates to have these tasks done for you, within certain parameters. Nonetheless, make sure that you don’t just hire the cheapest professionals, for they may cause more trouble than they solve.
2. PERFORMING INCORRECT BUSINESS VALUATIONS (NYC BUSINESS BROKERS SHOULD PERFORM THESE TASKS)
Getting professional help is key to getting a more accurate business valuation. NYC business brokers ought to have the necessary pedigree and resources to calculate your business’s worth, but you’d have to play your role as an owner by providing the required financial documentation.
In order to perform correct business valuations, New York City brokers will make a series of calculations based on various metrics obtained from the company’s financial statements and spreadsheets, as well as the local market conditions. This is usually done with the aid of an accountant or accounting partner.
3. LACK OF PRIVACY CONCERNS
Privacy is one of the most overlooked aspects of business selling on the part of business owners. Making your sale publicly known could affect your venture in a variety of ways. You wouldn’t want your competition or your employees to know that you’re planning to sell.
Business brokers are versed in many strategies devised to protect the privacy of the sale. One of them consists of drafting non-disclosure agreements that potential buyers would have to sign before the details of the company are revealed to them.
4. SKIPPING LETTER OF INTENT
Out of fear of losing a potential buyer, business owners neglect to get a letter of intent signed by the interested parties. This may make you lose a bit more time in the selling process, but you’ll possibly waste much more from dealing with prospective investors who don’t take the sale seriously and who feel they can simply back down from the deal with no repercussions.