by Doug Robbins

1. Avoid not knowing the true/real market value of your business.

Knowing what your business is really worth (from a qualified 3rd party) can save a lot of time and money and heartache (the HVAC company)

2. Avoid not having an offering memorandum.

An offering memorandum will/should contain all the information a buyer would require in order to submit an offer or ‘Letter of Intent.’  Failure to have everything quickly available will result in the buyer losing interest or confidence in your business

3. Avoid not speaking with your accountant to understand the tax ramifications of selling out.

Understanding the tax ramifications surrounding the sale of your business beforehand can save a lot of time and unnecessary, costly negotiation in structuring the transition in a tax favourable manner

4. Avoid not understanding the legal ramifications of various transaction structures.  An asset transaction versus a share transaction can make a huge difference in completing your transaction.  Asset transactions require a great deal more ‘compliance issues’ than does a share transaction:

• the bulk sales act
• HST certificate
• mechanical fitness certificates for vehicles
• lease agreements for both real estate as well as equipment
• recapture depreciation taxes
• transfer of licenses
• contract transfers
• etc.

5. Avoid being over exuberated about the business’ future.

If the business is touted as having a great fabulous future, the buyer will wonder why you are selling it if it is doing good, resulting in a credibility gap

6. Avoid misrepresenting anything about the business.

The due diligence done by most buyers is quite sophisticated, and research is so much easier (the internet) that your misrepresentation will most likely be discovered during due diligence resulting in your transaction not closing and your credibility being seriously tarnished

7. Avoid lying.

When you lie about something it can often be detected by body language, by correlating the lie to know facts of some other event (the roof)

8. Avoid admitting anything about “sweet money.”

Oftentimes, a person is quite proud of the fact they are not reporting all their revenues and paying the appropriate taxes.  When you admit to having ‘sweet money’ you are also admitting that you are a liar, cheat, a thief and a crook . . . who in their right mind would believe anything you say from that point forward. (the meat pies)

Copyright Robbinex Inc.  All rights reserved.  Doug Robbins, President and Founder of Robbinex Inc. has been assisting mid-sized privately held business owners with exit and succession strategies since 1974.   www.robbinex.com  Doug can be reached at 1-888-ROBBINEX or doug@robbinex.com