Hearing Asset Advisors -

Half Sized Blog Element (Single Author Style)

Half Sized Blog Element (Multi Author Style)

7 Important Questions to Ask Yourself When Selling a Business

February 10, 2024/in Seller Articles /by Hearing Admin

There is no denying the fact that for most people, the decision to buy or sell a business is one of the most important professional and financial decisions that they […]

Steps for a Successful Closing

February 3, 2024/in Seller Articles /by Hearing Admin

The closing is a pivotal moment in the history of a business as it marks the formal transfer of a business from one party to the next. Behind every successful […]

7 Important Questions to Ask Yourself When Selling a Business

February 10, 2024/in Seller Articles /by Hearing Admin

There is no denying the fact that for most people, the decision to buy or sell a business is one of the most important professional and financial decisions that they […]

Steps for a Successful Closing

February 3, 2024/in Seller Articles /by Hearing Admin

The closing is a pivotal moment in the history of a business as it marks the formal transfer of a business from one party to the next. Behind every successful […]

Full Sized Blog Element (Big Preview Pic)

7 Important Questions to Ask Yourself When Selling a Business

February 10, 2024/in Seller Articles /by Hearing Admin

There is no denying the fact that for most people, the decision to buy or sell a business is one of the most important professional and financial decisions that they will ever make. Let’s turn our attention to some of the key questions you’ll need to ask.

1. What is really for sale?

You’ll need to determine what is, and is not, for sale. If you own machinery or real estate associated with the business, are those items to be included in the sale?

2. What assets bring in revenue?

One important factor to consider when preparing a business to be sold is what assets are earning money. If you have assets that are not earning money, then it may or may not be prudent to sell those assets.

3. What is proprietary?

Buyers and sellers alike will want to consider what is proprietary. Anything from software and patents to formulations can be extremely valuable. Sellers will want to give substantial thought to how to best frame any proprietary property that they have in the best light. Buyers will want to carefully evaluate proprietary property to try to ascertain an accurate value. Outside experts may be needed to make an accurate assessment.

4. What’s your competitive advantage?

A business’s competitive advantage should be of importance to buyers and sellers. A seller should focus on understanding their competitive advantage, whether it is a certain niche, a superior manufacturing process or product, better marketing or a range of other factors. Properly framing your competitive advantage can help buyers see the full, and even untapped, value of your business.

5. What is your growth potential?

Buyers will want to consider factors such as whether or not the business has the potential to grow. If the business can’t be grown, then buyers should include this fact in their final decision and/or offer.

6. What agreements do you have in place?

Other factors such as employee agreements, non-competes, and the depth of management are all areas of concern for a prospective buyer. Buyers will want to consider if the seller has secured agreements from key employees and how dependent the business is on an owner/manager.

7. What relevant financial information will a buyer want to know?

Understanding how much working capital is needed to run the business and how financial reporting is undertaken are other factors that should not be glossed over.

If you are preparing to sell your business it is worth the time to pause and think about what your business might look like to a buyer. In short, what would you think of your business if you were the buyer and what questions would you ask?

Buying or selling a business is complex. Every single business is different and that means there is no 100% standardized approach and route towards success. A seasoned, experienced and professional business broker or M&A advisor can help guide buyers and sellers alike towards optimal outcomes.

MarchCattle/BigStock.com

The post 7 Important Questions to Ask Yourself When Selling a Business appeared first on Deal Studio – Automate, accelerate and elevate your deal making.

Steps for a Successful Closing

February 3, 2024/in Seller Articles /by Hearing Admin

The closing is a pivotal moment in the history of a business as it marks the formal transfer of a business from one party to the next. Behind every successful closing is months of focus and hard work. Simply stated, a successful closing doesn’t just happen, but is instead the byproduct of extensive negotiations.

One key document to utilize in the closing process is the Purchase and Sales Agreement. There are four key aspects to this document.

First are the terms of the agreement, which typically cover the price as well as detailed terms on how the business is to be paid. In the Purchase and Sales Agreement, you will find the status of any management that will be staying with the business.
This document also should contain conditions and covenants which include non-competes as well as agreements on what to do and what not to do moving forward.
Any good Purchase and Sales Agreement will, of course, include a description of the transaction. In other words, is the transaction a stock or asset sale?
Finally, the agreement will cover representations and warranties. This is typically negotiated after the Letter of Intent is agreed upon. In short, the warranties will provide that everything is as it has been represented.

Now, let’s look at the four key steps that are a must before the sale of a business can close.

Topping the list, is that the seller must provide satisfactory evidence that they have the full legal right to act on the behalf of the selling company. Additionally, the seller must show evidence that they have full legal authority to sell the business.
Secondly, all representations and warranties must be in place. Importantly, this will also include clearly stated remedies that are available to the buyer in the case of a seller’s breach.
Third, the buyer’s representative should have completed the due diligence process. A key part of the due diligence process is that any claims and representations made by the seller have been clearly substantiated and addressed.
Last, but certainly not least, necessary financing should have been secured. A critical part of the process is that all of the proper paperwork, as well as the appropriate liens, should be in place, as no funds can be released until these conditions have been met.

It is also important to note that there are two significant elements of closing that will take place simultaneously.

The first is the corporate closing which is the actual transfer of the corporate stock or assets. This step is based on the provisions set forth in the Purchase and Sales Agreement. All the paperwork that was carefully laid out in the Purchase and Sales Agreement has been completed.
The second major element is the financial closing. In the financial closing all the paperwork, as well as the legal documents needed to provide funding have successfully been executed.

While there is no doubt that closing is a joyous time, it is also vital to remember that the period leading up to closing is the time to have a laser-like focus. This is the most important time to avoid mistakes. Working with a business broker or M&A advisor can dramatically reduce your chances of experiencing mistakes during the all-important closing process.

insta_photos/BigStock.com

The post Steps for a Successful Closing appeared first on Deal Studio – Automate, accelerate and elevate your deal making.