Newland's Business Notes


Selling Your Business?  Plan Ahead

Volume 4 Issue 6 -- November/December 2000

Often, selling something of value, such as a car or a house, is not a simple task.  In this issue, we will focus on some of the matters you need to consider when selling another possession of value ó your business. 

After making the initial decision to sell the business, one of the next decisions is whether to use a Broker.  Most business Brokers ask for a commission of 10% and do not get paid unless they produce a Buyer and there is a closing.  You may want to make some inquiries on your own before listing with a Broker to see if any of your competitors are interested in buying your business.

Using a Broker

If you decide to retain a Broker, the Brokerage Agreement (the contract between Seller and Broker) must be considered.  As with any contract, a Brokerage contract can be changed or amended.  Letís say you have spoken with several local competitors who may be interested in buying your business, but they have not responded yet.  Can those leads you generated be excluded from the Brokerage Agreement should the competitors decide to buy?  Of course, but appropriate language must be included in the Agreement.

Most Brokers prefer to have an exclusive contract for as long as possible.  Such a Brokerage Agreement would provide the Broker a commission if any Buyer (even one  contacted before the Agreement was signed) decided to buy. 

Aside from exclusivity, the duration of the Brokerage Agreement is also important.  Fairness dictates that the Broker have adequate time to implement the listing and show your business to would-be Buyers.  On the other hand, if the Broker is not providing the desired result, after a reasonable time, you should have the right to terminate the Brokerage Agreement.

Whether or not a Broker is retained, if you are going to sell your business, you need to do some planning prior to listing it for sale.  Some of the "what-ifs" to consider are:

Since lawyers, such as myself, are good at "what ifs," this list could go on ad nauseam.  My intent here, however, is to raise just a few of the many questions that need to be addressed by a business Seller. 

Over the past 20 years I have assembled a Checklist for Business Purchases or Sales which covers many of the areas you need to consider in buying or selling a business.  Just call our offices or visit our Web site, www.tax-business.com, to obtain a free copy.  If that doesnít answer your questions, then call us.  




Copyright 2000

Published by the law firm of Newland & Associates, PLC
9835 Business Way
Manassas, VA 20110
Call us at (703) 330-0000 for a full range of business law and tax-related services.

While designed to be accurate, this publication is not intended to constitute the rendering of legal, accounting, or other professional services or to serve as a substitute for such services.

Redistribution or other commercial use of the material contained in Newland's Business Notes is expressly prohibited without the written permission of Newland & Associates, PLC.

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