Factors to Consider When Selling a Business| Phoenix Business Law
I’m Beth Cohn. I’m an attorney at Jaburg Wilk, and I work in the area of business transactions.
How Do I Prepare to Sell My Business
What people need to do first is to determine whether they have a buyer for their business. And a lot of times they’ll come in and they’ll say, “I want to sell my business,” and I’ll say, “Who are you going to sell it to?” And they don’t really have an idea of how to go about finding a buyer.
Can’t Find a Buyer
Sometimes they will sell their business, and other times they can’t find a buyer, so what they look at is that they look at the possibility of children coming into the business. Or they sometimes look at the possibility of employees buying their business.
How Should I Transfer Ownership to My Children
Sometimes what they’ll do when they’re transferring to their children is that they may sell interests in the business to their children, and what the parents will do is that they will decrease their own compensation so that what they’re getting is payments for their business interests instead of getting paid salary. So that works out really well, and it creates the cash that the parents need, and it gives the children the ownership in the business.
What Are My Options Outside of Family Members
The two choices are to try to find a buyer during their lifetime so that they can at least get the liquidity from the business and enjoy that part of their efforts and labor. Or after they die it’s sometimes very difficult to sell the business, because when the key person dies a lot of times the value of the business goes down significantly.
By: Beth Cohn