William A. Price, Attorney at Law CALL: 800-630-4780

Selling Your Business (Without Losing Your Shirt)


Many Americans own a side business, or make most of their money from a company they help run. Very few of them get the money they deserve after building the business, because they either leave feet first in a health emergency, or fail to sell the place on terms that let them keep busy, get paid, and/or take the shop back if the buyer fails to pay. This note will suggest some ways successful exiters have managed their transitions.


Keeping busy may be the most important deal point. Over the last 20 years, US Social Security statistics show the average expected retirement period has risen from 14.8 years to 18.8 years for a 65 year old male, and from 18.5 years to 21.2 years for a 65 year old female. Whatever the virtues of the game, there just aren’t enough good whacks likely to make full time golf an interesting prospect for that long. Traveling to Patagonia, like my surgeon brother Paul did when he took the picture above, is fun, but you run out of oceans after you visit the seven seas. If, instead of fully retiring, you make a deal like my periodontist brother Dan did, and plan to work one day a week in the business or professional practice you sell after the deal is done, along with occasional vacation cover or sales convention support for the new owner, you can help assure a successful transition, make money as long as you want to stay active, and avoid most of the stresses you had when still responsible for making payroll.


Payment is important. Many buyers are cash poor, but have good credit and enough assets to afford a loan that pays for 1-3 times your annual net profits, about as much as you can expect for any business with less than $1 million in annual sales. If you finance half of the buyer’s down payment, they still have skin in the game, but you have loan funds at closing, not just a hope the buyer will pay.


Seller’s remorse is universal in business sales, but not what you should negotiate in case of deal failure. A contract for asset or stock transfer after all installments of that down payment (or larger percentage) sales price is received keeps you in control, in case the transition doesn’t work – and out of the office, if you are paid, but just want to get back in the owner’s chair.


If you want to talk about your deal and post-deal options, drop me a line at wprice@growthlaw.com. The first cup of coffee or phone call is always free.


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