Selling A Troubled Business
Contact The BizQuest Staff
 |
 |
You awaken one morning to the realization that the business you've poured so much time, energy and thought into; the dream that was once the preoccupation of your every waking moment has turned sour - what do you do?
Market forces, changing consumer tastes, cash flow problems, or some unforeseen outside factor has brought you to the point of not being able to keep things going much longer. Do you, shut the doors and call it a day, liquidate your assets, declare bankruptcy? All of these options are certainly worth considering but though you weren't able to make it happen, does not necessarily mean that your business isn't valuable.
If your business is failing, tough decisions, that will affect you, the lives of your employees and your relationship with vendors and creditors, need to be made. At the best of times, making objective decisions about something so close to you, something that you've put so much thought, energy, planning and dreaming into, can be challenging. Conditions such as these make it all the more difficult.
Despite how things may appear at such a bleak moment, oftentimes failing businesses are able to find buyers. Though it may seem unlikely, there are people and companies out there looking for opportunities to acquire failing or troubled businesses.
Here are seven good reasons why a buyer may seriously consider purchasing your business:
- The buyer may already have an existing business like yours and, by combining the two, be able to operate at lower cost.
- The buyer may seek to acquire any number of your operating assets, such as desirable customer bases, complementary product lines, proprietary technology, key locations, staff, name, URL, or other tangible or intangible assets.
- The buyer may have expertise in restructuring or repositioning businesses, and has a plan to make your business profitable either by streamlining operations or through integration with their existing companies.
- The buyer may decide that it is more feasible to acquire your business, to invest in it and make it successful, than it would be to build a comparable business from the ground up.
- The buyer may have sufficient finance sources to carry the loss until your business becomes profitable.
- The buyer may have lower financial expectations and feel that, with minor cutbacks and a small investment, modest profits are achievable.
- The buyer may be looking for a loss to offset taxation obligations.
The opportunity of a sale may, however, give rise to tangential issues needing consideration. It's very likely that by this point, in an effort to keep things going as long as possible, that you've incurred some personal liability for your business debts. You may even have pledged some personal assets as security. If the proceeds of selling your business won't be enough to pay off all your creditors in full, then you'll still be personally liable for the previous arrangements that you made. If this is indeed the case, then there are options available to protect your interests and personal assets.
A 'friendly' buyer may be willing to assume your personal liability. Ask your creditors if they are willing to transfer the indebtedness to the buyer of your business. The creditor may be responsive to this, as long as the buyer has a stronger financial position than you.
With an unsecured debt, the buyer may be willing to pledge property, or any number of collateral assets, effectively securing that debt, and eliminating your personal liability. Obviously, for this to make sense, the incumbent buyer must have assets of sufficient value - in most cases, assets of greater value than the unsecured debt itself.
If the creditor will not allow the buyer to assume your personal liability on the debts of t
|
|