What exactly are you selling? Will some assets be of more value to some buyers than to others? Do you want to—or are you willing to—retain ownership of any of those assets?
Not all assets of a business are of equal value to all buyers. Some buyers may see more value in some of the assets than you do. You might also find that some buyers don’t want certain assets (for example, a contract for payroll administration or an expensive building) and might even value the business higher without them. While in a stock deal, as opposed to an asset deal, the whole entity is being sold; this analysis is still important.
Intellectual property generally consists of patents, trade secrets, copyrights, trademarks and trade names. You may have patents on your new ideas, such as product formulae or the way to make your products, or you may hold that information as trade secrets. Many types of names can be trademarks, such as your store name or a name of a beauty product or service. Symbols, logos, photographs, slogans, packaging shape and color can also be trademarks. Names for services are called “service marks.” Just like your brand, all trademarks and service marks set your offerings apart and show their source. Copyrights could cover literature, product brochures or the content of your website. Make sure you own what you think you own. If you are selling only part of your business, think about how some of the intellectual property that relates to several different product lines may be divided in the transaction.
The same issues exist about your rights to real estate. Make sure you have good and transferable title to your real estate if you own your premises. Any issues with title and any liens should be addressed before the business is marketed. Recognize that buyers may be particular about real estate because of concerns with environmental issues. Cleanliness is important. Just like showing a home for sale, a clean location makes a far better impression than a dirty, run-down one.
Is the real estate in question just suited to the current use? If the buyer isn’t interested, are there other buyers for this property? Is the asset worth more as part of the sale than it would be if you sold it separately? If the real estate is leased, can the lease be assigned to the buyer, or are there opportunities to terminate the lease early, and at what fee, or to sublet the property?
The quality and quantity of your inventories are both important. What is your percentage of obsolete or nonconforming inventory? Does it make sense to rework or discard such inventories before sale, or is it better to expect the buyer take it on? Having too much defective inventory on hand could suggest to the buyer either a problem with the manufacturing process, suppliers or internal controls. Some buyers might want extra inventories to carry them through the transaction. Is more capital than is necessary tied up in inventories?
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