If you’re like most entrepreneurs, you have exit plan in mind where you sell your small business and move on to the next venture. There are a few ways these sales can happen. Here’s a look at the three major categories of business sale.
3 Ways to Sell Your Small Business
- Assets Sale: In an assets sale, you will be selling your company assets over to another person or business without selling the company itself. This means that an attorney will need to go through your liabilities to determine areas where different agreements may or may not transfer to the buyer. You might also need to come to agreements with lenders, suppliers and others on whether the sale can happen. Some contracts will not allow you to pass debts on to another party without an agreement.
- Equity Sale: In an equity sale, the essential structure of the company remains the same. The company merely changes hands. All the assets, contracts and liabilities will typically remain with the company.
- Mergers: In a merger, your company will combine into a larger organization and become part of that business. This will effectively be like an equity sale, except for it won’t require complete approval from all equity owners. A merger can also have tax benefits for the buying company that an equity deal would not. These deals will still require approval from various third parties, and can be an extremely complicated legal process.
Knowing the right way to go about selling your business is the first step for planning your exit. Make sure you have the proper legal representation throughout the sale. You wouldn’t want to sacrifice so much building a business, and then leave money on the table during the sale.