The experience of buying or selling your business can be a dream or it can be a nightmare. In such a large transaction, it’s important that you know some things in advance. In fact, you need to know a lot in advance. The process of sharing information transparently between buyer and seller is known as ‘disclosure.’ For both the buyer and seller of any Austin, TX area business, disclosure is your friend.
It’s absolutely vital that a buyer know exactly what they are buying. That makes disclosure an indispensable part of the due diligence process. The exact nature of the due diligence process varies for each sale, but one constant is the obligation to completely disclose all facts about what’s being sold, and even what known issues could affect the future performance of the business.
Because disclosure is so vital, and the implications of incomplete disclosure are so potentially costly, it cannot be ignored. Answer all questions from the buyer, even if they seem odd or unimportant. If you don’t know the answer, you’re free to tell the buyer that you don’t know.
Always do your homework. Never assume, and always ask lots of questions. Unfortunately, a few sellers will want to skimp on the facts. It’s your job not to let them.
What to Disclose When Selling Your Business
When selling your Austin, TX business you must disclose the following:
- Any and all information requested by the buyer
- Any and all information that might materially impact the business after the sale
That means if you know your biggest customer at The Domain won’t need your product next year, you have to disclose it. Know that the biggest bar on Sixth Street no longer needs your services and is about to stop ordering? You’ve got to say so. Yes, it could affect or even stop the sale, but it’s far better to do that than face legal challenges down the line.
Even personnel issues must be disclosed. Often the large part of the value of a business lies in its trained employees. Therefore, if you know your most valuable salesperson is moving away from central Texas next year, you’ve got to let the buyer know beforehand. Anything you know that can in any way materially impact the business in the future must be disclosed.
For the Seller:
Go through every detail of your company. If there’s bad news, don’t hide it. If it comes out before the sale, it could affect the price. But if it comes out after the sale, you might find yourself in court.
For the Buyer:
You’ll also need to do your homework. You’ll need to know the right questions to ask and you’ll need to be persistent and thorough in your preparation.
The Bottom Line
Using an experienced partner like CGK Business Sales in Austin, TX (or any of our other locations around the country) can be of benefit to both parties in a sale. We can assist throughout the due diligence process to make sure both the buyer and the seller are fully satisfied and have full disclosure. Our job is to make selling your business happen. Contact us today to start that confidential conversation.