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More Than 40 Years Of Legal Service To The Baton Rouge Region

Avoiding common mistakes when selling a company

On Behalf of | Mar 12, 2020 | Buying Or Selling A Business |

Business owners in Louisiana and throughout the country may decide that now is the time to sell their companies. While the sale of a business can help to solidify a person’s financial future, there are many pitfalls that can arise during the sale process. For instance, an individual may try to claim that his or her company is worth more than it truly is.

It is important for sellers to know that buyers will do their own due diligence before a sale closes. Therefore, the buyer will likely figure out that the seller is misrepresenting revenue or other important financial figures. In some cases, lying to a buyer could be enough to kill a deal. It is also possible that misleading a buyer could provide that person with leverage to renegotiate the terms of the deal. In many cases, companies will add back expenses to make it look like they made more money than they did.

Even if a seller isn’t attempting to mislead a buyer, incomplete information could result in a deal not getting done. Ideally, those who are attempting to sell their companies will create systems that make it easier to organize and retrieve information. Keeping quality records will make it easier to justify a company’s valuation as well as help explain any changes in revenue or operating expenses.

The process of buying or selling a business may be a complex one to undertake. Therefore, it may be a good idea to do so with the help of attorney. Legal counsel might be able to help a person organize financial data or take other steps to prepare a business to be sold. Attorneys may also be able to resolve legal issues that may make it harder to sell a company in a timely manner.