Ed Miso, Attorney, BOR discussed on Defenders of Business Value
Owners make sense of the value in their company so that one day they can sell it when they want how they want and to whom they want each week. I answer three questions about business. Value were selling companies that come in from the website or social media. This is a little bit shorter of an episode but hopefully it will be helping your journey to making a salable company. All right so let's get to it. Okay the first question. How is a buyer going to take over a relationship with the customer that or the customers that I have developed over the years all right so the first thing is that you know? Chances are that you've got a lot of businesses as well as Employee relationship that you developed. I mean you just can't be in business for probably as long as you have Without developing those relationships. But as we've talked about in the guests that I've had on the podcast I mean grades a little bit of a challenge to transfer those relationships to a buyer. And that's what the buyer ultimately is doing is trying to mitigate those risk. So like I said. There's a risk associated within win. And and you should anticipate that the buyer is going to to want to figure out ways to offset any perceived risk. So there's a couple of areas of you probably want examine contracts with your customers you probably need to I identify sign ability now. Most customers aren't going to blindly just assign contract over to someone that they've never met so the transition between seller to buyer becomes a more instrumental so the second thing you need to keep in mind is that Evaluate the relationship. You know that the is the relationship really with yours or with the company Both at grades. Excuse me for both. It does create a challenge The the seller believed that The work around is just self stock. And then then the problem with the assign ability just goes away because the stock sale facilitates that contract going with the buyer. Well the buyer doesn't the buyer and the buyer's attorney will probably kick back pretty hard and say you know that's not. There's just too much risk into due diligence. That has to be done. In order to to mitigate that risk in doing so so I wouldn't anticipate that a stock sale would be likely so the second way and and probably the the most prevalent way to to do it is is an orderly transition so the transfer of any kind of relationship is it takes time and as you move through the sale process. How do you facilitate? How do you facilitate those those relationships? Well it takes time. And then it also takes the seller working with the buyer and working with the customer and the employees and that's why the TR training in transition agreement becomes instrumental in that effective transfer. The next question. What Environmental Issues Do? I need to consider when selling my company so buyers and their advisers are extremely sensitive these days to environmental issues. Not that they shouldn't there not that they haven't been historically but Certainly the the greater awareness of damage to the environment is amplified. And so you know how much it cost to remediate and or cleanup an area. So there is a heightened sense of concern especially when there are red flags around that particular business so those companies that have that on That are drycleaners. Gas Stations Anything that has chemicals that that can be spilled on the ground. A lot of manufacturing companies If you're building is old and or whether you own it or release it and it's It was housed on on something that perhaps a gas station or dry cleaner or some other type of high risk land. Then you you need to keep that in mind and then how. Lastly if the buildings old as best as or lead paint bait lead based paint you also want to be sensitive to that so the easiest most cost effective way to to identify whether or not you have a problem. Having what's called a phase one environmental study conducted and that's just the noninvasive study in its Akin to the way a perhaps a a realtor or I'm sorry an appraiser a real estate appraiser would do a drive by in size up the company or the company The the real estate from from the road without going in and then going back and research you know the history of that piece of real estate and then if there are there are signs that Perhaps it requires additional Study Than Bor- boring samples and different other techniques would be employed for Face to study. So yeah I think that Answers that question okay. The last question in should I replace or repair equipment before pointing my business on the market. Well you know. Today's business buyers are engaging equipment appraisers to evaluate tangible assets. So it's a good idea to make sure that the equipment the equipment in good working order and has Economic life remaining the re the equipment appraiser is certainly going to be akin to knowing what challenges perhaps that piece of equipment or the the package of equipment represents and if you haven't been updating the equipment then it might be a situation where the value is penalized as a result for it so the long answer. The short question is is. Yeah you probably need in order to get maximum value to a replace or repair the equipment that is in disarray before getting on the market or at least anticipate that. You're going to be penalized for not doing so. Well that about wraps it up but before you go. Would you like to receive a weekly newsletter curated articles that I've stumbled upon or I'm writing about regarding business value in making a company salable? Well if so go to vendors business value DOT COM and. Sign up for the newsletter. Now if you have a question that you would like answered go to again. The website defenders of business value dot com and pushed the appropriate button. Or you can email me at Ed at defenders of business value DOT com. Or you can reach me at twitter at Ed Miso. Thank you so much for spending time with me if I can ever be of help to you in any way please. Don't hesitate to reach out. Have a good weekend and I'll see you next week. This was another episode of the defenders of business value podcast for more episodes packed with strategies to increase the value of your business visit defenders of business value dot com for show notes transcripts in free tools to start you on your journey. Subscribe now so you don't miss any future episodes..