| > | | | | transactions by not planning advance with the |
| Selling a business? Learn the Three Deadly | | | | result that they were taxed at ordinary income |
| Weapons that could literally cut the value (sales | | | | rates rather than long term capital gains rates! |
| price) of your business in half. Just take a few | | | | 3. Business Owners Selling Must Follow The Boy |
| crucial steps that can double what you receive in | | | | Scout Motto — Be Prepared |
| a sale. | | | | After working for twenty-five years, two owners |
| Here are the Three Deadly Weapons that can | | | | decide that they want to sell their business and |
| wreck the sale of your business. These weapons | | | | retire. They begin working less and have not |
| are based upon experience, discussions with many | | | | trained anyone to do the technical things that |
| business owners, and many years of representing | | | | they do so well. Of course by working less, less |
| businesses in and out of the courtroom. | | | | technical tasks get fulfilled and less income rolls in. |
| In selling a business, you can learn how to avoid | | | | The best preparation would be to sell before |
| the three mistakes that will literally cut the sales | | | | income goes down and better yet have installed |
| price of your business in half. Think about having a | | | | the six systems that literally double the value of |
| business that should be worth $750,000 but only | | | | your business. |
| being able to sell it for $375,000. | | | | One needs to begin preparing to sell a business |
| There are 700,000 businesses that will come on | | | | probably years before the business is sold or |
| the market and change hands every year. That | | | | even offered for sale. There are six systems |
| number represents 30% of 2,500,000 businesses | | | | that every business must have. Without them, |
| that owners will want to sell every year. 70% of | | | | the business is not an investment that buyers |
| the businesses do not sell. Many of those end up | | | | drool over. |
| being liquidated for lack of a buyer. | | | | This test will tell you whether your business has |
| If you do not pay attention to three factors in | | | | those systems: |
| selling your business, you literally may only receive | | | | 1. If you take off all of next week and do nothing |
| half of what you should get. | | | | in your business, what will happen to the income |
| 1. Not Understanding the True Value of Your | | | | of the business? |
| Business. | | | | Increase Decrease Unaffected (Circle one) |
| Albert wants to sell his business that has a | | | | 2. If you take off all of next week and do nothing |
| ten-year track record. The business provides | | | | in your business, what will happen to the flow of |
| Albert an income of $150,000 per year in the | | | | new business? |
| retail area. Albert has done his own valuation of | | | | Increase Decrease Unaffected (Circle one) |
| what he thinks the business should sell for and | | | | 3. Do you have a written business continuity plan? |
| wants a price of $1,500,000 for the business. | | | | Yes No |
| That price is a factor of 10 times the net income. | | | | 4. Do you have videos or audios of your plans for |
| Unfortunately, in the retail sector of Albert's | | | | the business over the next three years? Yes No |
| business, the going rate is a multiple of three | | | | 5. When someone calls your office to schedule an |
| times the net income or $450,000. | | | | appointment, does someone different answer the |
| Because of his unrealistic price, Albert will not be | | | | phone and/or do they have a set script to use to |
| able to sell his business. | | | | answer the call and close the appointment? Yes |
| 2. Not Understanding How The Sales Proceeds Will | | | | No |
| Be Taxed When Received. | | | | 6. Who is your favored buyer for your business? |
| Janet owns a business in a corporation. The sale is | | | | __ |
| proposed to her as a sale of assets and no | | | | Do you have a name ready or do you have no |
| assumption of liabilities. Although the sale of assets | | | | clue whom the buyer would be? |
| will be treated as a long-term capital gain at the | | | | 7. If you do not come back from your next |
| corporate level, she has not considered how she | | | | appointment, ever, who will sign checks at your |
| will get the money out of the corporation and into | | | | company? |
| her hands personally. Unfortunately, she has also | | | | ___ |
| signed the Purchase and Sale Agreement without | | | | 8. Will your death cause your company's lines of |
| consulting her attorney or her accountant. How | | | | credit to be called due? |
| much tax will she have to pay? | | | | Yes No |
| There are a number of options that could have | | | | 9. Do you have a checklist to be followed if you |
| been considered on how to structure the | | | | are suddenly disabled and unable to care for the |
| transaction. Unfortunately, you have to game plan | | | | business? Yes No |
| and run the numbers on all of the options BEFORE | | | | 10. Are you ready to learn how to implement the |
| you sign the purchase and sale agreement. Some | | | | necessary steps for an effective exit strategy? |
| owners have actually unintentionally structured | | | | |