Buying or selling a business is the type of experience that can tremendously change an individual’s life.  And although some individuals have a fantastic experience with this, it can be quite difficult for others.  The deciding factor seems to be whether the individual buyer or seller is armed with good information.

What do I need to consider before selling my business?
Even the most proficient business people are often perplexed when it comes to selling the actual business.  As such, it is critical to seek legal counsel to assist with negotiations.  Business owners should discuss the following with a qualified attorney:

• Reasonable Price Range:  There are various methods of determining a reasonable sale price for a business that will neither push away potential buyers nor cause the seller to suffer a loss.  Generally speaking, sellers either ask for a price that is comparable to what similar businesses have sold for or they ask for a price close to the estimated value of the business assets plus an additional amount for goodwill. 
• Tax Implications:  In many instances, the sale of a business requires the business owner to pay taxes on a fairly significant amount of income.  This tax burden can be relieved with the help of a tax expert.
• Preparing the Books:  Prospective buyers will almost certainly wish to examine business records before finalizing a deal.  Business owners can organize records and even recast tax return numbers to portray the business in its most favorable light. 
• Deal Negotiation:  After finding a buyer, business owners must decide upon such items as whether to sell the entire business entity, whether to retain some business assets, and how to receive payment.  
• Sales Agreement:  Business owners should rely on an attorney to draft a sales agreement which outlines all things relevant to the sale.  Terms of the contract typically include closing price, payment structure, debt assumption, and a method of assuring full payment. 
• Filing with the IRS:  Together with the buyer, sellers must execute an Asset Acquisition Statement and submit it to the IRS with their end of the year tax returns. 

What do I need to consider before purchasing a business?
Individuals who purchase an already existing business avoid many of the struggles that those starting a business from scratch encounter.  In most instances, an existing business already has at least some name recognition and clientele.  Nevertheless, a potential buyer would be foolish not to research a business diligently before making a purchase.  The following is a list of considerations one should make before purchasing a business:

• Find a niche:  As a general rule of thumb, it is best for individuals to avoid purchasing a business which they know nothing about.  It is just common sense that an individual will have an easier time running an operation which he or she has some background in. 
• Find a business to purchase:  Once an individual determines which type of business to go into, he or she must locate a business to buy.  Logic says to look for a business close to home, which is a good idea, presuming the business appears profitable. 
• Study business records:  Potential buyers need to examine business records and determine whether the business is profitable.  It would be wise to perform this research under the advisement of a qualified attorney.  Records that should definitely be examined include employee files, accounting information, balance sheets, cash flow statements, financial records, and records from any past lawsuits that may have been filed. 
• Closing Agreement:  Upon arriving at the decision to purchase a business, a buyer must barter a deal with the seller.  Here again, it is important to act under the supervision of a qualified attorney who can provide guidance as to reasonable closing terms and help draft a sound purchase agreement.