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From the monthly archives: March 2010

We are pleased to present below all posts archived in 'March 2010'. If you still can't find what you are looking for, try using the search box.

Understated Inventory When Selling a Business

Reporting a lower inventory to their accountant is something many business owners have been doing for a long time. And many accountants just accept the number. In addition to the obvious concerns, when it comes to selling the business, big problems can arise. How will the inventory be valued in the Purchase Allocations? And who is going to have to pay the various taxes on the larger amount? Business owners should give their accountants an accurate inventory value each year to avoid troubles at the closing table!

Keys to Successfully Closing the Deal

The closing is the formal transfer of a business. It usually also represents the successful culmination of many months of hard work, extensive negotiations, lots of give and take, and ultimately a satisfactory meeting of the minds. The document governing the closing is the Purchase and Sale Agreement. It generally covers the following: A description of the transaction – Is it a stock or asset sale? Terms of the agreement – This covers the price and terms and how it is to be paid. It should also include the status of any management that will remain with the business. Representations and Warranties – These are usually negotiated after the Letter of Intent is agreed upon. Both buyer and seller want protection from any misrepresentations. The warranties provide assurances that everything is as represented. Conditions and Covenants – These include non-competes and agreements to do or not to do certain things. There are four key steps that must be undertake ...

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Only the Owner Knows When It's Time to Sell the Business

"Whatever the reason, there should be something other than dollars that motivates you to explore a sale. After all, if it weren't more valuable to own the business than to sell it, no one would ever buy it." Mike Sharp, M&A Today, November 2002. The owner of a successful company is considering selling, thinking now may be a good time. However, he is told by an outside advisor that business is good and that if he holds on to it for several more years he will get a much higher price. On the surface, this makes a lot of sense. After all, when an advisor tells the owner that if he keeps it for three more years and the price will double, that's a terrific incentive to keep plugging away. However, there is another side to what would appear to be sound advice. The most dramatic downside would be that the business could go downhill rather than uphill as the advisor predicted. Although no one can predict what the economy will do, there are a couple of possible scenarios. The industry itself might be impacted ...

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Key Factors That Add Value to a Small Business

One of the very first questions that business owners really want to know is: How Much Is My Business Worth?

A fair determination of a firm's market value is essential to insure proper compensation for years of hard work and personal investment. The following are some key factors that add value to your company and would be part of what is considered in the business' overall assessment for the marketplace.

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