Acquisition or Sale of Business Considerations

Posted on Jan 14, 2012 by Marvin Brown, CPA/ABV |

When contemplating the acquisition or sale of a business, it is necessary for a business owner and financial and legal advisors to consider several factors in conjunction with their
negotiations with the other party. Several of these factors are as listed below:
Cash Vs. Terms
1. Buyers may insist on sale with favorable terms- owner financing

2. Businesses usually sell for a higher price than sales for cash at closing: Cash sales generally average 83% of sales for terms. Seller’s Continued Participation in Business

1. Many buyers insist on the seller’s continued participation in the
business for a specified period of time. Reason: Smooth transition,
retaining customers, customer goodwill, etc.

2. Agreed-upon salary should not be part of the purchase price.
Reason: Seller is working for that salary.

Agreement Not to Compete

1. Standard procedure in sales transactions today; a buyer should
not purchase a business without such an agreement containing
provisions for both time and distance.

Please allow us to assist you and your professional advisors with your decisions should you decide to acquire a business or to sell your business. We have a general business appraisal practice which includes a vast array of different types of companies in different industries for which we have performed business valuation services in the past. (See the Section on Services/Experience on Page Two in this website). An example of several of the services that we offer are:
Valuations -Sale of Business, Buy-Sell Agreement valuations,
Valuations – Business Acquisitions, Partner/Shareholder Admissions,
Company Mergers and Acquisitions
Partner/Shareholder Withdrawals,
Sale of Business Valuations

Marvin T. Brown, CPA/ABV

Tagged: business valuations, valuations business acquisitions, mergers and acquisitions, buysell agreement valuations, valuations sale of business