The Importance of Upfront Disclosures
When we engage a client to sell a business or property, we go through an interview process, review financial information, and use disclosure forms to find out as much as we can about the business.
Many times in that process we have people tell us things that they think are not important but that we know are really important to deal with before we start talking to prospective buyers and showing the business.
We have learned from experience that there are an awful lot of ways a deal can be killed during due diligence when undisclosed problems, even minor ones, are discovered. At that point there has been a lot of effort spent by our client, the buyer, and us that can end up being wasted.
The key is to minimize surprises.
It is really important to disclose things like customer or competitor lawsuits, partner or family ownership disagreements, minority share ownership, pending developments nearby, and anything else that may be perceived to be negative. It is best to do this right up front.
When dealt with early in the process things like that can be resolved, or a prospective buyer can decide whether or not to proceed, and if they do they will not be surprised later on when they get into the details of the issue.
If a buyer has made a commitment to purchase and is in due diligence reviewing details and comes across similar issues at that point, issues that could have been minor early in the process become a major threat to the trust that is required to get through a deal.
More important than the details of the issue is the fact that it was not disclosed, which leads to the question, “what else are they hiding?” This can end up in the termination …
Get Ready to Sell – NOW
Anyone owning a business is usually too busy running and building the business to think about when they will no longer want to or are able to run the business. Some owners act like they will live and work forever. Others just are not interested in talking about anything other than the immediate crisis they are dealing with.
In our seminars we suggest that the time to make plans for selling is when you buy or start a business.
This is good advice for two reasons. First you are prepared in case of a real crisis and second doing the things necessary to prepare for a sale involves doing a better job of running the business and usually makes it more profitable now.
Of course, one of the biggest concerns when it is time to sell is “How much can I get for it?” Simple answer – the better organized and profitable the business is the more we can get you for it.
To really be in good shape to run your company you need to maintain good books and records. If you do this from the start, with your registration records with the Secretary of State as well as your financial bookkeeping systems, you will be off to a good start.
Financials, preferably for three years, are essential! Tax returns for small businesses, compiled financials for small to medium sized businesses, and audited financial statements for large companies are expected by any serious buyer.
If you have employees, keep organized files with records of their initial appointment, a description of their duties, any contracts and any benefit programs you may have for them, as well as complete payroll records.
Depending on the business if you have contracts with customers those need to be up to date and the same …
Laconia Dairy Queen is Under New Ownership
After 21 years of successful ownership of this well-established seasonal Dairy Queen franchise store located in the Lakes Region of NH, Michael and Michelle Merrill have passed the torch to the new owners Brian and Mariluz Flanders. Currently this is one of the top producing stores in the franchise region and has been serving customers from this location for decades. The new owners plan to continue to build on that success. The Flanders plan to open for the season March 24.
Ivor Thomas and Leon Parker represented the sellers in the transaction.
Read the full press release published in the Laconia Daily Sun.…
5 Reasons to Consider Selling Now
1. Buyers are out there and ready. Despite predictions that the market would evaporate as a result of the COVID stay at home orders, we are seeing strong interest right now in good business opportunities. Buyers appear eager to make a permanent change in their work that enables them to be in charge rather than work for someone else.
2. Avoid the Rush. Many owners that were considering retiring before the last economic downturn, stayed on during the rebuild and then continued on due to their strong financial performance. Many of those will be ready to exit now and a flood of businesses for sale is anticipated.
3. Entrepreneurs make their move when the economy slows. People who were comfortable in high paying jobs are using this disruption to pursue other opportunities and business ownership is one of the main ones. They know that it is easier to build an existing business than to start one from scratch.
4. Interest rates are at all-time lows. In addition, the SBA is offering special programs on closings completed before September 27, 2020.
Additionally, over the last few months, you have probably made some changes to your business that will make it more saleable such as reducing expenses, trimming staff and implementing other operational efficiencies. These changes will make the business even more desirable.
Please contact us when you are interested in having a conversation about your options and opportunities.…