How To Sell A Business In Washington State
Selling a business isn’t easy—it’s important to seek advice from professionals. When you’re looking to sell a business in Washington State, it’s essential to seek the advice of a business broker.
Here are four things you should consider when selling a business in Washington State—and many of the ways a business broker can help:
Business Valuation
There are several different methods of business valuation used for small-to-medium businesses (SMBs). The two most commonly used are:
Seller’s discretionary earnings (SDE)
Earnings before interest, taxes, depreciation, and amortization (EBITDA)
The method of valuation you should use will depend on the size of your business, your industry, and other factors. A business broker can help you determine which valuation method to use, find the industry multiplier that’s appropriate to your business, and then calculate the value of your business.
Legal Issues To Consider During a Business Sale in Washington
Potential buyers will look carefully at your business to determine whether or not they may become liable for broken contracts, pending lawsuits, or other possible legal troubles that the seller is in. Ensure that any legal issues your business may be having are resolved before you try to sell—and be sure to pay any taxes that you owe!
As a seller, you’ll also want to ensure that prospective buyers sign confidentiality agreements, especially before they go into the due diligence process. You’ll be sharing sensitive information like financial statements, so a confidentiality agreement is a must—otherwise, your competition could gain access to valuable information about your business.
Tax Considerations
As a business owner, there are a couple of different ways you can structure the sale of your business, each of which has its own tax implications. Stock purchases and asset purchases are the two most common ways of structuring the deal, and they both have their own tax implications.
Asset deals tend to be favored by buyers because they can pick and choose which assets they purchase; they can also depreciate and amortize certain assets, leading to more opportunities for a tax deduction. For this reason, buyers are often willing to pay more for asset deals—but as the seller, asset deals may lead to significantly more taxation.
Stock deals, on the other hand, lead to less taxation—but they’ll typically also lead to a lower purchase price.
How you structure the deal is only one way you affect taxation—talking to a business broker can help you reduce tax liability.
What Should You Expect From the Sale Process
Business-to-business transactions can be complex at the best of times—when you’re selling your business, it’s always complicated. You’ll need to hire a business attorney and talk to your accountant. You’ll need to go through the due diligence process, revealing sensitive information to your potential buyer. To remedy that, you’ll have to ensure there are non-disclosure agreements in place—and all of this happens well before you finalize the sale agreement and transfer ownership.
In short, you should expect negotiations, lots of paperwork, and complex financial and legal transactions when you sell your business in Washington State. A business broker can help you through all of it.
Ready To Sell? Hire a Washington State Business Broker
Every seller has a different point of view—you might want to sell your business quickly, or you might be willing to wait longer to get more money. You might care a lot about reducing complexity, or you might want to get into the nitty-gritty of the tax implications.
Washington State business broker Jason Brice can help. He has extensive experience selling businesses in Washington; he’s an expert in SBA loans and can help prospective buyers secure financing.
Looking to sell your business? Call Jason Brice today!