Selling a Business/Professional Services Firm

Business owners sell their businesses for any number of reasons. Regardless of the impetus for the sale, one thing is certain: The sale transaction is a critical point in the life of a small business. It requires a high degree of professionalism, focus, and objectivity. Things can go wrong, resulting in loss of business value and income or even a stalled sale.

Pro Tip

SBA data show that on average only 15% of businesses that are listed for sale actually sell—and those 15% are professionally listed. Getting into the "Sweet 15" requires planning, focus, and the right advisors.

All of these are significant challenges facing the business owner who decides to tackle the sale of a business alone. They become all the more challenging when you consider that the average time to market and close a business sale can be upwards of 18 months.

Read More: Three Business Valuation Methods

The Process of Selling a Business or Professional Practice

There are a number of steps to selling your business. Ideally, you would have begun planning your exit strategy with a business attorney years before you intended to leave your business, which would help reduce your stress and increase the likelihood that your sale is successful.

As you initiate the succession plan you’ve put in place for your company or your professional practice, you’ll go through the follow broad steps:

Prep Work

Your advisors will gather information on your business, financial statements will be recast to show an accurate picture of the earnings of the business, a valuation will be conducted, and a confidential business review will be prepared for interested buyers.
Confidential Marketing

An active marketing effort will begin. Interested parties will contact your advisor, and they will sign confidentiality agreements prior to learning specific details about your business. Importantly, potential buyers are qualified by your advisor saving you time and effort. Interested parties are invited for an in-person visit.
Offers and Negotiations

Hopefully you will receive offers from interested parties in the form of a purchase contract or letter of intent. Negotiation of the terms and contingencies of the final transaction will be necessary. Contingencies can include lease assignments, loan approvals, due diligence satisfaction, franchisor approvals or other items necessary for the buyer to successfully operate the business.
Due Diligence

Before the deal closes, the buyer will conduct a detailed and extensive investigation. The goal is to uncover any risks or dangers that might be lurking behind the curtain. You will be asked for various governing documents, contracts or agreements that the business has entered, and employee-related documents. Keeping good business records speeds this process along and reduces the risk that the buyer might unearth something unsavory.
Prepare and Sign Sale Contracts

After the buyer has completed the due diligence, you will draft, negotiate, and sign the asset or stock sale agreement and any other transaction documents. This step is vital to your transaction and should not be tackled alone. Once you’ve signed the contracts, you are locked into the terms of those contracts—for better or worse. You should work closely with an experienced business attorney to ensure that these contracts are comprehensive and properly protect you.
Close the Deal

The closing is the final step in the sale process where both parties meet to countersign the contracts and other documents that you’ve negotiated throughout the process. All the provisions are reviewed before the parties sign any papers or any money changes hands.

Pro Tip

Professional practice sales often have unique demands beyond those of regular commercial companies. For example, lawyers must comply with the Florida Bar Rules when selling their firms. It’s vital for accountants, financial advisors, dentists, and attorneys who want to sell their practices to engage a qualified and experienced attorney to handle the sale of their practice.

The Business Attorney’s Role

The process of selling a business requires multiple sets of skills. Your skill set is entrepreneurship, which is an absolute necessity to run the business effectively. But selling a business is a team sport. Throughout the sale process, there will be legal minefields to navigate. You could face intricate securities requirements or complicated contractual provisions that require a skilled legal mind to manage. Going either of these alone can spell disaster for your deal or for its ultimate benefits to you. Your business attorney will assist at many points in the transaction. Principally, he should be part of the initial offer, he should negotiate and prepare the contracts for the sale to ensure that each document is legally sound, comprehensive, and reflects the unique aspects of your sale, and he should close the transaction with you.

Start Planning Your Exit Strategy with Us

When you sell your business, what you want is a legal advisor with real-world business experience, who can learn about and understand your business interests, and who will give you practical advice to help you accomplish your objectives. Fortunately, here at Alexander Business Law, we focus exclusively on business-related legal matters. We have advised closely held businesses and business owners for over 25 years on business succession arrangements and sale transactions. We can work with you through the course of the sale process to help you understand and mitigate your legal risks, negotiate and draft the transaction documents, and close the deal, so that you maximize the value of your business sale. If you’ve been thinking about selling your business, now is the time. The earlier you get started developing and implementing an exit strategy, the more profitable it will ultimately be. Call us today at (407)649-7777 or submit the contact form below so we can help you sell your business and capitalize on all your hard work.

Selling a Business/Professional Services Firm