Buying & Selling a Business

Undeterred by the weak economy, a surplus of buyers remains ready, willing and able to purchase businesses of every size, and contrary to the ever-present scuttlebutt about banks not willing to lend, they are, in fact, making loans, including loans for purchase/sale of businesses. After all, that’s what commercial banks do. They must make loans to earn a profit.

A Denver-based business owner called me today to discuss his desire to sell. He said:

“I know a handful of companies that would be really good buyers for this business. I could just call them, but for some reason that doesn’t feel right. Why?”

This business owner’s instincts are right, and he’s in the minority. A good many business owner-sellers make the mistake of handling the sale themselves. After all, “if you want a job done right, do it yourself,” right? But “For Sale by Business Owner” is not the way to garner maximum value. It’s not the way to maintain confidentiality. It’s not the way to get the deal done in a timely manner.

If you don’t own 100% of your company, you should assess whether you have some shareholder-related issues that could hinder a sale. First, if the parties choose to effect the sale by purchase of stock1, any minority shareholder could hold up the deal if you don’t have agreements in place that force them to accept terms agreed to by the controlling shareholders. This is because buyers almost always want to buy 100% of the outstanding stock. They don’t want to become partners with someone they don’t know. They also want to own all the stock to maximize the money they can make with the investment.