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Business sales can be more complex than one thinks

After pouring years of effort into establishing a successful business, entrepreneurs in New Jersey may one day decide to sell their business, and move on to a new venture in life. An entrepreneur who has invested a lot of heart into his business may have a very rosy picture of it. However, it is important to think practically when negotiating a sale, as a few key issues may rear their heads during this time.

First of all, the more an owner has delegated and the less control he or she has over the day-to-day operation of the business, the more valuable it may seem. Buyers do not want to buy a business that will fail to operate the minute the old owner is gone. This may be a hard fact for business owners to swallow, but the more they hand the reigns over to others, the better they may look when negotiating the sale of the business.

In addition, while some family businesses operate successfully, others might hang on to incompetent employees for sake of family or employee loyalty. However, a buyer will look at the situation in an unbiased way, and may not want to purchase a business whose current employees will not be able to withstand the transition in ownership, which could lower the value of the business during negotiations.

Moreover, business owners should understand that a "handshake deal" may not cut it. Owners should not sign contracts they haven't read or do not understand. Buyers will have a host of professionals such as attorneys doing their due diligence in the purchase of the business. Business owners looking to sell may also want to retain their own attorneys who can examine all past agreements as well as the current sales negotiations and any agreements made therein until the sale is final.

Finally, business owners should also keep in mind the debts they are carrying when they decide to sell. The more debts there are, the less cash flow the business owner will have when selling the business. Potential buyers may not want to pay back the previous owner's debts.

As this shows, a successful business sale involves more than a handshake and signature. Negotiations are a key aspect of any business sale, so it is important to know what to expect, and to seek the help needed to make the sale a success.

Source: Forbes, "The 5 Things Entrepreneurs Must Know When Selling A Business," Holly Magister, Sept. 3, 2013

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