What to Look Out for When Selling a Business

Unfortunately there are scammers out there that try everything to hurt us in a financial transaction. We have a few things you should watch out for when selling a business. Many of these have to do with potential risks.

1. Perhaps one of the oldest scams in the book when selling a business is not finding a legitimate buyer. People are out there looking for ways to get a business without paying a dime for it. They may even sign a legal document regarding what they will pay for the business, but then they attempt to back out of the deal or refuse to pay you the proper amount. The worst part is they get away with it because of a clause hidden in the documents you signed.
2. To avoid any issues with the legal document for the sale agreement you need to have your solicitor or business transfer agent create the document. You should also have your solicitor present when you sign the document. At any time that the document is out of your sight while the buyer is looking it over and signing it you should always reread the document and make sure no changes have been made.
3. You should never try to sell the business by yourself. Scam buyers look for business owners trying to sell the business on their own. They purposely look for the person who can be duped.
4. You need to have your business valued before you begin the sale. The buyer may hire an “expert” to value your business. In this way they can try to tell you it is not worth the asking price. By having your own evaluation you can ensure that you are getting fair market value.
5. If you have problems with your business you should avoid the sale. For example if there is a lawsuit or other things pending you need to wait to sell until these are solved. By trying to sell during this process you could end up without collateral to pay the lawsuit if it doesn’t end in your favour. It can also be a potential point of contention with a buyer in that they want a lower price to take care of your problem.
6. If you let the potential buyer look at the books always have another person in the room. If you cannot be there yourself then your accountant or the business transfer agent should be on hand.
7. Lastly be wary of internet sites. Check the owner of the site, check references of the site and always make sure that you are working with the right people. It is easier on the internet or through an anonymous phone book name to get scammed by those who are supposed to be helping.