What The Process Of Selling A Company Entails

The process of selling a company usually begins with pre-negotiation in which the buyer either offers to buy the assets and name of an existing organization or a certain number of shares of stock. The first is beneficial to the buyer, while the second is more beneficial to the owner. In some cases, one business will merge with another, forming a new company.

Negotiations begin with the potential buyer making an offer for some, or all, of the assets of the company. He may also offer to buy the name in hopes to continue operating under that title. The seller has the option to accept or decline this offer, based upon what he thinks the company should be valued at. This is one of the most difficult parts of the process, as it is a measure of all assets owned and the future profits to be made.

Owners of S-corporations, which are small businesses, are referred to as shareholders. They usually operate in the capacity of a manager or participate in the operations as well. When they sell their stake in the business, they sell the shares that they own. The new owner then takes up the activities of the previous owner. In many cases, if others own shares as well, they will first need to approve the sale.

The buyer should request to examine the articles of incorporation if appropriate. He should also take a look at the tax returns from the past several years, any employee or union contracts and any documentation regarding loans or leases. Each of these is important in determining the net worth of the company. It is often beneficial to request to see the books, or accounting records, from the past several years as well.

After reviewing all of the documents and finalizing the price, the final date on which the business is to exchange hands will complete the deal. It is then that a contract will be drawn up giving the specific terms of the deal, and both parties will sign. Everything should be sorted out at this time.

The final date, or closing date, should be established. At this time, the transfer takes place and the buyer assumes ownership of the business. Since he now owns the right to the company, he is free to continue operations or sell the assets as he sees fit, unless the contract restricts him from doing so.

If you are looking at getting a business valuation you might also want to consult an expert on the procedure of exit planning

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