The Conversations with a Business Attorney podcast is your legal guide to navigating the challenges and opportunities that arise throughout the life cycle of a business. Jeff Large, a start-up business owner, explores topics such as operator agreements, employee retention, and the value of protecting your company with Rhoades McKee Attorneys. Don’t get lost, listen and learn.
Jon Siebers, a mergers and acquisitions attorney at Rhoades McKee, discusses ways to prepare your business for a sale and tips for balancing negotiations.
Three Things You’ll Learn:
- Key elements of your business that affect its value and the ability to sell it.
- Types of buyers and three main payouts for mergers and acquisitions.
- How to reduce risks in your company, whether you plan to sell or not.
There are two types of sale that Jon explains a business can go through: an asset or a stock sale. Jon gives a list of the things sellers should have in place when they’re ready to sell and sets a clear timeline for the process.
He talks about how reducing the risks in company contracts influences the sale process:
[9:10] “A lot of times if you have a contract that locks in a revenue stream, your company is gonna be viewed as less risky and therefore more valuable to a buyer. So looking at your contracts and figuring out where there are risks and where we can clean things up. It’s gonna make it better for a buyer and it’s probably gonna make it better for you as the seller while you still own the company as well.”
The three types of buyers – a strategic buyer, a professional buyer, and a financial buyer – are used to highlight the importance of knowing your goals in selling the company. Jon explains how to decide if the buyer is the right fit for the business.
Beyond matching the seller’s goals, Jon says properly vetting the buyer is important early on in the negotiation process for knowing which type of sale to complete. Jon breaks down examples to show the three types of payouts and how to mix them to meet your needs.
While discussing how to navigate the negotiation process, Jon advises on how to build your legal team, whether you plan to sell or not. He looks at both the red flags and the business’ goals to set owners up for success, in sales or ownership.
Click here to read the transcript of the full interview for Episode 9.
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