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Selling a business? Consider these factors

On Behalf of | Apr 11, 2018 | Contract Disputes

The dream of many entrepreneurs is to build a fledgling business to a point where it becomes noticed by a much larger competitor. The threat of gaining market share can increase the company’s value and make it a valuable acquisition, thus allowing the entrepreneur to “cash out” and pursue another dream.

When preparing to sell a company, it is important for entrepreneurs to take some time for financial planning exercises. They can help in putting in perspective a good floor price, as well as what may happen if an offer exceeds the prospective ceiling of value. This post will identify a few issues to consider.

Retirement plans – Whether you are decades away from your proposed retirement or planning to withdraw from the workforce next year, analyzing how selling a business will fund your retirement is an important consideration. Perhaps a provision in the sale will allow you to maintain a small percentage of the business or enjoy a continuous dividend even though you are no longer with the company.

Major purchases – It is not uncommon for an entrepreneur to use the proceeds from the sale of a company to fund a new endeavor. Perhaps you have always wanted to change industries and found a new company.

Charitable endeavors – If you have charitable aspirations with some of the proceeds, perhaps that can be achieved by funding or contributing to a donor advised fund (DAF). This type of entity allows donors to make a charitable contribution from the proceeds of a business sale. This will create an immediate tax benefit and allow the donor to make additional donations over time from the fund.

If you have additional questions about selling a business, an experienced attorney can advise you.