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8 Steps for Preparing Legally to Sell a Business in Florida
Many entrepreneurs overlook the importance of business succession planning as they launch and grow a company. Having an idea of where you want to take a business and what you want to do with it when you get there can help you proactively plan for passing it on to an heir, entering into an IPO, or selling the business in the future.
Selling a business can be a complex task. You may need to prepare the company to be sold, engage in marketing to find the right buyer, and go through contract negotiations and due diligence steps before the deal can be closed. By taking proactive steps, you can better navigate some of the legal challenges involved in selling a business in Tampa.
1. Understand the Current Market
As soon as you believe you might want to sell a business, start gathering information about the current market for commercial transactions and business sales in your industry. This data can help you understand whether it’s an optimal time to sell a business and what challenges you may need to overcome in doing so. It can be helpful to speak with commercial real estate agents or business brokers who are experienced in managing business sales in Florida, the Tampa region specifically, and your industry.
2. Prepare Transparent Financial Documents
You can certainly work to present and market your business in the best possible light. There’s generally nothing wrong with playing up benefits and strengths to help entice buyers. However, savvy business buyers will conduct due diligence, which typically involves a review of certain financial documents and other details related to your business.
An attorney can help you understand what you might have to or want to disclose about your business—and why you can’t necessarily hide less favorable factors from potential buyers. A lawyer can also draft confidentiality agreements that you can require potential buyers to sign to help protect the security of your business data as you discuss details during the lead-up to a possible sale.
3. Create a Strong Sales Agreement
As buyers prepare to take the next step in a business deal, it’s important to have a strong sales agreement that governs the process and protects you from undue risk should the buyer decide to back out of the deal.
Business sales agreements typically encompass a lot more than price and what date the assets will change hands. These documents can be many pages long and full of legal verbiage and clauses. An experienced business law attorney can help you create a strong agreement and understand the implications of any other paperwork you may sign as part of the sales process.
4. Ensure You Understand State and Local Laws
As you go through the process, create or sign contracts, and even market your business for sale, it’s critical to understand how state and local laws and regulations impact these activities. This is one reason it can be a good idea to get a business law team involved as early in the process as possible. A lawyer experienced in helping business owners sell their businesses in Florida can provide guidance about the law and what your options might be.
5. Have a Strategy for Handling Tax Concerns
You also need to understand any tax implications and requirements for selling your business before you begin this process. That might range from reporting business changes to the state to understanding how profits from the sale of the business might be taxed. A tax lawyer or accountant can help you with this part of the process.
6. Identify and Plan Proactively for Risks
You may face specific challenges when selling your business, and being aware of those potential risks can help you plan ahead to overcome them. Risks could include challenges marketing a business in an oversaturated market or finding the right buyer for a niche business that requires an owner/operator with specific skills and licensure, for example.
7. Address Existing Contracts and Agreements
It’s also a good idea to conduct an inventory of all your existing contracts and agreements. How would a change in business ownership impact those agreements? This is a critical data point for the buyer, as they need to know if your customer list truly carries over and if they can rely on your vendors and other partners to continue to support the business once you sell it.
8. Hire the Right Local Professionals
Selling a business in Florida successfully takes careful planning and an understanding of state law and how it applies to these procedures. If you plan to sell your business in Tampa, it’s important to work with the right professionals who have an understanding of state and local laws, markets, tax structures, and other important factors.
Some professionals you might consider working with when selling a business in Tampa include:
- Real estate agents or business brokers. Commercial agents with an understanding of business sales practices in Tampa may be able to provide detailed information on the market and help you find the right buyer for your business. You might want a real estate agent to assist if you are selling real property such as buildings and land with your business.
- Accountants and tax professionals. Finance professionals can help you put your company books in order and ensure seamless transition of financial assets to a new owner.
- A business lawyer. Consider reaching out to Venerable Law at 813-680-4530 to get help with the legal side of selling your business.
