California business owners may have a number of different reasons they want to sell their business. Among the most common reasons are retirement, change of career, and change of life circumstances. Others make a living starting up small businesses and then selling them a short time later for a profit. Whatever the reason, a California small business attorney is often a valuable asset to guide the process.
In our area, one thing your Sacramento business lawyer will tell you is to be prepared for a lengthy process. The primary reason the process is lengthy is that businesses are living, breathing entities. The sale of a business is unlike selling a tangible object, or even something like real estate. In fact, the sale of a business can actually include tangible objects like equipment and inventory and real estate in the form of retail space.
This is not, however, what makes a business difficult to value. The particular problem with selling a business is that the value of the business is also tied to its current customers and its ability to bring in new customers. These factors determine a business’s ability to generate profit. This concept is called the goodwill of a business. Not surprisingly, the goodwill of a business is an ever-changing and shapeless figure.
Your attorney can connect you with financial professionals whose expertise is examining businesses to determine their value. These professionals are skilled at compiling figures on the value of the business’s inventory, equipment, property, and goodwill. When these factors are combined, a Sacramento commercial lawyer can utilize the information to prepare the sale documents.
The preparation of these documents is a matter best left to an experienced professional. One reason is that the sale of a business can create sensitivities among certain groups. Employees may feel wary about the sale of a business due to their perception that their job may be in jeopardy. Vendors and business partners may also be wary of the sale of a business due to their perception that their revenue streams and business relationships may be jeopardized. The best way to alleviate these sensitivities is to entrust the business transaction process with someone who recognizes the value of confidentiality. Legal professionals are accustomed to protecting your confidentiality, and can take proactive measures to make sure your decision to sell is private and not panic-inducing.
Your attorney can also help you decide how to structure the sale. Some business sales occur in one lump sum. Others occur once a prospective buyer secures a loan, not unlike a mortgage for a home. Other deals are done in installments over a period of time. It is in your best interest to consult an attorney with ties to the location of your business. This way, your attorney can draw on the local knowledge of business practices and the particular business transaction laws within your jurisdiction.
The sale of a business can be a daunting and stressful prospect. You worked hard to build your business. Make sure its transition to new ownership is in good hands.
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