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.

In part one of this two-part series, we went over some basic considerations that should be kept in mind when providing seller financing as the seller of a business. This is a common arrangement for some business sales, and one where sellers need to do their due diligence and know all the relevant information before moving forward.

At Utah Business Consultants, we're happy to assist clients around Salt Lake City and nearby areas of Utah with all their business sale needs, including everything from business valuation to exit planning, succession planning and more. While part one of our series went over areas like buyers assuming debt, interest rates and collateral considerations, today's part two will look at some other factors that sellers should be considering when offering seller financing for a sale.

business seller financing factors

Tax Implications

Just like in virtually any business sale format, there are tax implications that come with seller financing. This is especially true if the sale price of the business includes real estate, and it's important to understand potential capital gains tax issues that might arise here.

For sellers who have owned their business for multiple years, the Section 1231 gain designation may be an option - this allows the gain from the sale of business assets to be treated as long-term capital gains. However, there are certain qualifications that must be met to qualify, and sellers should speak to our pros at Utah Business Consultants for more details on how this may apply to you.

Unsecured Creditors

Does your business have any unsecured creditors, meaning those who hold claims on your assets without collateral? If so, these creditors will need to be taken into account during the sale - they may need to sign off on various loan agreements, for instance, or be paid in full prior to closing.

This ensures that they won't suddenly come back and try to make a claim on your assets once the business has been sold, which could put both you and the buyer in a difficult position. Again, this is an area where our pros can assist with any concerns you may have during the process.

Closing Costs

Closing costs can be large for some business sales, and it's important to know who will be responsible for them. In many cases, the seller handles closing costs - this is one area where seller financing can come in handy, as some of the funds from the sale can go toward these costs.

However, there are rare situations where buyers are expected to cover closing costs themselves. Buyers who have already been approved for financing may have an easier time with this, but it's important to clarify these terms early on in the sale process.

At Utah Business Consultants, we're happy to provide assistance with all these areas and more when it comes to seller financing for business sales. Contact us today for more details or to learn about any of our services.

Financing is a common topic of discussion and negotiation during most business sales, and one particularly frequent form of financing that's often considered is seller financing. Some small business sales in particular come with some level of seller financing, and as a seller, ensuring you're knowledgeable and prepared for any such negotiations is important.

At Utah Business Consultants, we're here to help clients around Salt Lake City and other parts of Utah with every element of selling their business, from business valuation, marketing the acquisition to exit planning strategies in maximizing the sale. In this two-part blog series, we'll go over some of the most important elements to keep in mind if you're selling your business and considering the option of including any level of seller financing as part of the transaction.

business sale financing debt

Will the Buyer Assume Debt?

One of the common questions that arises when seller financing is included in a business sale: Will the buyer be taking on any existing debts you have as the seller? In all Asset Purchase cases, particularly if your company comes with some significant assets like fixtures, furniture and equipment, or loans, these debts are paid off through Escrow from the Purchase Price of the business.

If the acquisition is a Stock Purchase, there are fewer potential paths forward here. For one, the buyer may assume some or all of this debt as part of their purchase - this is often a simpler route and helps streamline the process. And naturally, you need to think about how such debt considerations impact the overall purchase price of the business as well.

Interest Rates and Loan Terms

Another important question that arises: What will be the interest rate for any seller financing loans, and what lengths or terms will these loans come with? In most cases, these decisions are made based primarily on the tolerable risk level involved in the terms of your particular sale - higher-risk sales may come with higher interest rates, while lower-risk sales will often have rates closer to those found on traditional business loans.

It's also worth considering the length of the loan term and any potential balloon payments that might be included. Balloon payments are large, one-time payments that come towards the end of a longer-term loan - they're designed to help alleviate interest costs for both parties, but they can still be significant. Be sure you're accounting for these in your negotiations, if they're included.

Collateral Considerations

Another major factor to consider for both parties here is collateral. This refers to any assets that are attached to the seller financing loan - they can be seized by the lender if the buyer fails to make payments and defaults on the loan.

As a seller, you'll want to ensure that any collateral is properly valued and well-secured - this helps protect your interests in case the buyer struggles to make payments. As a buyer, on the other hand, you need to be conscious of what collateral you may be putting up when taking out this loan, as well as what steps you can take to minimize risks in this area.

In part two of our series, we'll go over a few additional financing options to consider when selling your business. To learn more about any of our business sale services or exit planning, contact the pros at Utah Business Consultants today at 801-424-6300!

In part one of this two-part blog series, we went over some of the reasons why a business sale may not close successfully or otherwise fall through. While the goal of every business sale is to be completed without any hassle or issue to any party involved, the reality is that this isn't always possible - and knowing some of the possible pitfalls here can be helpful for avoiding them.

At Utah Business Consultants, we've spent years helping clients in Salt Lake City and nearby areas of Utah with every business sale need they may have, including business valuation, succession planning and more. While part one of our series went over common sale fall-through situations that are caused by buyers and sellers themselves, today's part two will look at a couple other categories of business sale blockers to be aware of - and how to steer clear of them wherever possible.

business sale blockers financials

Third Party Blockers

There are a few third parties who may be involved in a business sale, and in some cases, these parties may cause issues that lead to a sale falling through. One such example is when the buyer or seller of a business has become involved in tax disputes or other legal problems.

In many situations, third-party issues like these can be avoided if both the buyer and seller do their due diligence before entering into any agreements. It's important to carefully research all parties involved in the sale and ensure that they are not facing any legal challenges that could affect the sale. If such issues do arise, it's crucial for both parties to work together to find a solution.

One common third-party issue to be aware of in many sales is the presence of a landlord. In cases where leases are involved, the landlord’s approval may be necessary for a successful sale to take place. Make sure to communicate with all relevant parties and ensure that any necessary approvals are obtained before moving forward.

Financial Blockers

Finally, there are a few financial issues that can come up during a business sale and cause it to fall through. Issues with financing are one of the most common examples here - sometimes, buyers may struggle to secure the necessary funds for purchase, or they may demand certain guarantees from the seller that cannot be met.

In these situations, it's important for both parties to be transparent and communicative with each other. If a buyer is struggling to secure financing, the seller may be able to offer alternative solutions or agree upon a payment plan that works for both parties. Additionally, proper financial planning and preparation before entering into a sale agreement can help prevent these issues from arising in the first place.

By being aware of these possible third-party and financial blockers, buyers and sellers can increase their chances of a successful business sale. And, as always, the experienced team at Utah Business Consultants is here to help guide you through every step of the process and mitigate any potential issues that may arise. Contact us today to learn more about our comprehensive services!

Business valuation is a critical factor in the strategic planning of exit strategies, especially for Utah Business Consultants. This process involves assessing a range of factors to determine a business's economic worth, offering valuable insights that impact decision-making and negotiations. For Integrated Talent LLC, having a precise understanding of business value is essential for making informed decisions about exit strategies.

 

**Personalized Exit Strategies**

Utah Business Consultants recognizes the need for tailor-made exit strategies. Business valuation plays a pivotal role in this customization. If selling the business is the objective, an accurate valuation guides pricing strategies, ensuring maximization of enterprise value. For succession planning or mergers and acquisitions, a valuation guarantees fair market value of ownership and informed choices in potential partnerships.

 

**Continuous Monitoring for Agility**

Utah Business Consultants understands that business valuation is not a one-time event but an ongoing process. The value of a business will fluctuate due to various factors. A robust business valuation serves as a constant companion, guiding owners toward successful exits and strategic business decisions.

While the goal of every business sale is to efficiently allow for the purchase of a business by one party from another, the reality is that this isn't always accomplished. There are a few reasons why business sales may not close successfully, or may fall through before they reach the finish line - and knowing them in advance helps with both awareness and avoidance of any such issues from your end.

At Utah Business Consultants, we assist clients around Salt Lake City and other parts of Utah with all their business sale needs, from exit planning and business valuation to marketing, negotiations, and diligence support among many other business brokerage services. Across this two-part blog series, we'll go over the four categories of "blockers" to business sales - and what can be done to avoid the controllable elements therein and facilitate a workable deal for all parties.

business sale blockers buyer seller

Buyer Blockers

In many cases, the blockers to a successful business sale come primarily from the buyer side. These can include:

Seller Blockers

The seller side of a business sale can present its own set of blockers, including:

No matter the circumstance, understanding these inhibitors ahead of time is key for both buyers and sellers to ensure that the business transaction process is as smooth and successful as possible. In the next part of this blog series, we’ll discuss other factors that may block business sales, plus how to steer clear of them.

At Utah Business Consultants, we specialize in representing business owners in Salt Lake City, Utah and other nearby areas with all their business sale needs. Contact us today to find out how we can help you with your business sale needs.

There are a few key pieces of documentation that may play a major role in a business sale of any kind, and one that will definitely be considered during this process is known as a terms sheet. The terms sheets represent a prospective buyer's potential offer and some of its basic terms, and is vital for both buyers and sellers to be aware of.

At Utah Business Consultants, our business brokers are here to help clients around Salt Lake City and other parts of Utah with every possible element of selling their business, including terms sheets and other documentation that may arise. In this two-part blog series, we'll discuss the basics on terms sheets, common components included in them, and what to be thinking about for each of these elements.

business sale term sheets basicsTerms Sheet Basics

As we alluded to above, terms sheets are a document that outlines the key terms of a prospective buyer’s offer. They may be anywhere from a single page up to 10 pages or more, depending on the complexity of the deal.

There is no singular format out there for a terms sheet, though you may see similarities between them when it comes to common components and elements. They can range from very informal, basic documents up through the more detailed ones with exact numerical figures and specific components included.

The purpose of a terms sheet is to provide both sides – buyer and seller – with an understanding of what the final purchase will entail, should both parties decide to move forward. It's essentially the framework for a definitive purchase agreement that will follow and be built upon, should both sides decide to continue pursuing the transaction.

 

Our next few sections, and on into part two of our series, will go over some of the key elements of terms sheets and how to think about them.

Sale Structure

In many cases, some of the most important information on a terms sheet will cover how the sale of the business will be structured. This includes items such as whether there is an asset purchase or stock purchase, how much cash and financing may be involved, any provisions for earn-outs, non-competes or other elements that are included in the purchase agreement.

These elements can often have a major financial impact on either side, so it's important to understand each of them and what their implications may be.

In part two of our series, we'll look at some additional elements of terms sheets, and what to keep in mind for both buyers and sellers as they examine different offers. Keep an eye out for the next installment!

In the meantime, contact Utah Business Consultants if you're ready to start the process of selling your business in or around Salt Lake City. Our experienced team is here to help guide you through every step!

In part one of this two-part blog series, we looked at some of the basic elements of the due diligence process during a business sale to keep in mind. Due diligence is one of the most important final parts of any sale, one that involves the buyer looking closely into several important parts of the business to confirm it's what they intend to purchase.

At Utah Business Consultants, we're here to offer a wide range of business sale services to clients around Salt Lake City and other parts of Utah. We provide everything from exit planning to business valuation services to help with distinct parts of the process, including due diligence. Today's part two of our series will look at some of the other key elements of due diligence to keep in mind, and what to think about during each stage.

business sale due diligenceCustomer Lists

One major element that buyers will be interested in is the customer lists of a business, to see who their current customers are and how much potential there is for growth. It's important to be up-front about any customer contracts that may end soon, as well as any other agreements that could affect the buyer or the estimated value of the company.

In some cases, you may need to provide detailed contact information for customers as part of the deal, or at least confirm that you have all their relevant details. In addition, you should also be transparent with your customer loyalty data - how long have they been customers and what percentage of them stick around?

Market Share Comparisons

Down related lines, potential buyers will also want to understand more about the company's market share in comparison to its competitors. Can you prove that your business has a unique value proposition and is outperforming the competition? Understanding this can help to reassure buyers that they're getting a good deal.

Key Personnel Information

Another key element of due diligence, particularly for SMBs, is understanding the key personnel at the company. This includes confirming that your executive team has extensive experience in their field, that they're properly trained and licensed to do their job (if necessary) and other important details about them.

Additionally, buyers will want to make sure that any key personnel are staying with the company after the sale and that they're properly incentivized to do their best work. This can help ensure a smooth transition and continued success of the business under its new ownership.

Overall, due diligence is an important part of any business sale process. Make sure you understand all the key elements involved so you can be prepared when it comes time to start the process. At Utah Business Consultants, we're here to help you every step of the way. Contact us today if you have any questions or need assistance with your business sale!

While a business sale may feel very close to finished once the buyer and seller have both signed a letter of intent to move forward in the final stages, there's still one more major hurdle to cross. This is known as due diligence, and it's an important process where all parties involved can make some final checks to ensure they aren't taken by surprise with any details of the deal.

At Utah Business Consultants, we'll happily walk any of our SLC or other Utah clients through the due diligence phase of your business sale, ensuring that all the i's are dotted and all the t's are crossed. In this two-part blog series, we'll discuss the various parts of the due diligence process and how to consider each while finalizing your business sale.

business sale due diligenceProduct Line and Equipment Analysis

One of the key features of any due diligence process is the thorough analysis of a company's products, services and equipment. Buyers need to understand exactly what they are purchasing in terms of assets and potential future liabilities.

This isn’t just a physical inspection either; buyers will often want to review an itemized list of all current and discontinued products, services and equipment. They’ll also look for any potential intellectual property or patents related to the business.

It's very important that sellers provide accurate and up-to-date information during this process, as buyers could later claim damages if it turns out anything was misrepresented in the initial due diligence.

Copyrights or Trademarks

Another major element of due diligence is the confirmation of any copyrights or trademarks associated with the business being sold. The buyer should make sure they are legally able to use any existing logos, slogans and other branding materials associated with the company without fear of legal action from a third party.

There may also be some business sales where copyrights or trademarks do not transfer as part of the sale. In these cases, it's important to determine what will happen to these items and how they will be managed after the deal is complete.

Financial Records

Reviewing a company's financial records is another key component of due diligence. It's important for buyers to understand exactly where the company stands financially, as this can greatly affect their decision to purchase.

Buyers will look at financial statements, tax returns and other records to get a better handle on the company's cash flow and overall financial health. It's also important for buyers to understand any existing debt that may come along with the business sale as well as any long-term liabilities or commitments.

In part two of this series, we'll take an in-depth look at the remaining parts of due diligence. Be sure to check back for more information about how you can ensure your business sale goes as smoothly as possible.

At Utah Business Consultants, we have extensive experience helping clients with the due diligence process in SLC and throughout Utah. If you're looking to buy or sell a business, contact us today to learn how we can help.

© Copyright 2023, Utah business consultants
phone-handsetcross