Focus On What Matters Most For The Sale Of Your Business

At Watrous | Goodwin | Reha, we handle many business acquisition transactions every year. We approach the buying and selling of businesses with creativity and imagination. Many businesses rely on information and relationships, as well as on other intangible assets. We focus on these aspects of a business's value to preserve the highest available value for the seller. This also allows for more asset capture and post-closing enforcement of intangible asset protection for the buyer.

Key elements that every business owner should understand as part of the sale of business process include:

Price — Many times, the price at which a business is being sold is already decided by the parties before the lawyers are brought in to provide advice. For those parties seeking to negotiate price, there are formulas that are accepted in some industries, while other industries have no "rules of thumb" whatsoever.

Appraisers can be of some assistance in determining price, and the owner may be aware of the price generated by other similar businesses in similar situations. In the end, what will drive price will be the interest of the buyer in buying, the interest of the seller in selling, the financial performance of the business, the general health of the industry, the economy, and the value of the business's assets.

Stock or assets — There are essentially only two types of sale transactions: a sale of the company's stock and a sale of the company's assets. Usually, closely held businesses are sold on an asset basis, primarily because a sale of assets will cut off many general creditor claims as to the assets being sold.

There may be overriding reasons to sell stock, however, such as a key relationship with a third-party customer, vendor, franchiser or regulator that may be easier to accommodate if the business itself remains within the same company, which will typically result when stock is sold instead of assets.

Financing — Some business sales are financed by institutional lenders, some businesses are sold on a cash basis, and some sales are accomplished through "owner-carry" financing. For the business owner who will finance all or part of the sale — a common structure for the sale of a closely held business — the reality that the owner will be entering closing as a business owner, but leaving the closing as a "banker" presents many additional issues that must be planned for and documented.

In addition, since the seller will have a long-term vested interest in the business's continued financial viability, owner-carry financing presents unique challenges from a future business perspective.

Real estate issues — Many times, the sale of a business will also generate the sale of the building that houses the business or assumption of a commercial lease. In either instance, proper planning, negotiation and documentation are a must.

Protecting Valuable Assets And Accommodating Change

Business owners need to understand what makes their business unique and valuable. Perhaps it is a reputation for service. Maybe it is a handful of key employees and the creativity they present. Perhaps it is a unique product or service.

Focus on these matters will typically allow for attention to appropriate details, which, with proper communication, planning and documentation, will be adequately represented and protected in the transaction. Likewise, since people are usually the key ingredient in many businesses' important relationships, issues such as retention of key employees, future compensation and the like will gain importance.

The point of sale is also a moment in a business's life cycle that presents unique opportunities to protect assets, with such tools as effective noncompete agreements, nondisclosure and trade secrecy provisions and the like.

Our Team Weaves Creativity And Vast Experience To Facilitate Your Business Sale

One of our founding attorneys, John F. Reha, is a noted authority and author on issues commonly presented by noncompete and trade secrecy agreements. He has more than 35 years of experience and has taught this area of law to many other attorneys. He has also spoken to numerous trade groups, addressing the need to build business acquisition documents around capturing intangibles such as "idea capital" and customer base, commonly the most important assets in such transactions.

John also taught for many years as part of the adjunct faculty of the Colorado Society of Certified Public Accountants on business acquisition transactions. In teaching, he has stressed the importance of planning and protection to ensure that the buyer and seller both obtain the greatest value and protection possible from these fundamentally important transactions.

Watrous | Goodwin | Reha can assist with business analysis and sale planning, as well as facilitation and proper documentation of the transaction. Our attorneys have extensive skill in this area, bringing imagination, creativity and energy to the table to assist the buyer or seller of the closely held business. To schedule a consultation, call our Littleton office at 720-594-7400, or complete our convenient online form.