Business Sale Myths: Debt, Control, Percentage

In part one of this two-part blog series, we went over some of the most common myths and misconceptions that tend to still be found in the world of business sales. Having the proper information ahead of a sale or purchase of a business is vital, and these myths often get in the way of this for many business sellers or buyers. 

At Utah Business Consultants, we offer a huge range of business for sale services to clients around Salt Lake City and other parts of Utah, including business exit planning strategies, company valuation and more - and we're also happy to provide basic information to all our clients, including debunking silly myths like these. Here are a few other examples of common misconceptions within the realm of business sales, plus the proper information in each area. 

explaining business sales employees

Myth #3: Taking on Company Debt is Required

Also known as "seller paper," there's a common belief that when you sell a business, you have to take on some of the company debt in order to complete the deal. This is completely false - while you can certainly offer this option if you desire, it's not required whatsoever. 

There are multiple ways to structure the sale of a business, and taking on company debt is just one option among many. In fact, many buyers will be hesitant to purchase a business if it comes with significant debt that they have to take on. As the seller, you have multiple options for managing any company debt during a sale - and keeping your hands clean when it comes to this area is often recommended.

For some buyers, taking on debt may be an attractive option if it means they can acquire a valuable business at a lower price. However, the decision should ultimately be left up to the buyer and negotiated as part of the sale agreement.

Myth #4: The Buyer is Always in Control

Another common misconception is that when selling a business, the buyer has all the power and control in negotiations. While buyers do have a significant amount of control, the seller also has considerable power in shaping the deal. 

In fact, many sellers make the mistake of thinking they have no leverage in a business sale, but this simply isn't true. The seller's knowledge and expertise about the business are incredibly valuable to the buyer, and can be used as leverage during negotiations. Additionally, the seller has control over important aspects such as setting a price and choosing a buyer. 

It's important for sellers to understand their value in a business sale negotiation and not let themselves be taken advantage of by buyers who may try to use common misconceptions to gain more power.

Myth #5: Selling 100% of the Business is Required

While some may mistakenly believe that selling a business automatically means selling 100% of it, this is not the case. In fact, there are various ways to structure a sale and different percentages of the business's ownership can be transferred.

For example, if you as the seller still want some involvement in the business or have specific assets you want to retain control over, these can be negotiated during the sale process. It's important to have a clear understanding of your goals and priorities for the sale so you can work with potential buyers to find a mutually beneficial agreement.

At Utah Business Consultants, we have experience working with buyers and sellers to find creative solutions that meet both parties' needs. Don't let common myths and misconceptions hold you back from successfully selling your business - contact us today for expert guidance and support.

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