As a business owner, you may be asking yourself, “how do I sell my business in Amarillo?” That is one of the questions here at Caprock Business Consulting, we get asked most as business appraisers. There is an array of things to be aware of in any business transaction, and I have tried to list the top six things to understand (or at least be aware of) when selling your business in Amarillo.

Sell-Side Representation And Process

The information in this section examines the selling process for a mid-market company in Amarillo. The steps from here on out assume that an Amarillo buyer has already been found, and you now want to sell the company. The first step is to find a merger and acquisition (M&A) advisor in Amarillo, like Caprock Business Consulting. The next step is to sign an engagement agreement with the M&A advisor, who will represent you as the seller. Once the engagement agreement has been executed, the selling process can be broken down into a few steps for any Amarillo company wanting to sell the business:

1. Collect data – This can include historical financial statements, tax returns, forecasts, organizational charts, marketing and advertising information, lease agreements, and market research. This is the backbone for how to sell a business in Amarillo. 
2. Negotiate price and terms with buyers – When answering the question of how to sell my business in Amarillo, perhaps the most important factor includes maximizing the value for the sellers while giving the buyers the confidence that they are being treated fairly. Controlling the expectations of both a buyer and seller are vital. When there are multiple buyers whom you can sell your Amarillo business to, the buyer has negotiating power and the ability to walk away.
3. Structure the transaction – Negotiating the sale of an Amarillo business is never as black and white as merely maximizing price. Without addressing all of the legal and tax consequences to structuring a sale, I will focus on the two most important: a stock sale and an asset sale.
   1. Stock Sale: When deciding how to sell an Amarillo company, a stock sale is what sellers generally think of first. Sell the stock in the company, pay capital gains tax, and the buyer assumes the seller’s contracts, rights, and so on, without assignment.
   2. Asset Sale: Selling price starts out the same; however, the buyer is buying the assets of the company rather than the stock. The buyer receives a “step-up basis in assets” and can depreciate the assets all over again (avoiding future taxes). The seller pays ordinary income tax (much higher), and avoids liabilities with the transfer.
4. Receive letters of intent/term sheets from buyers – When offers are obtained from buyers in Amarillo, they are usually given to the seller in the form of a term sheet, letter of interest, or letter of intent. Term sheets are used to express interest and basic terms between a buyer and seller in a full acquisition transaction of an Amarillo based company. Sometimes buyers will want to perform more due diligence or conduct meetings with the company’s management. A Letter of Interest lets the seller know they are serious. A complete letter of intent (LOI) is used to establish a written framework for selling the business in Amarillo. The LOI provides a mutual understanding of the deal point between the buyer and seller. An LOI usually includes both binding and nonbinding terms.
5. Respond to due diligence requests – Due diligence is an ongoing process that begins as soon as two parties begin discussing the concept of selling an Amarillo business. This step usually follows a fully executed LOI. During this stage, the buyer performs in-depth investigations to confirm the assumptions used prior to making and negotiating the deal.
6. Negotiate definitive agreements – While due diligence is being completed, the definitive agreements will likely be drafted and circulated between the legal teams of the Amarillo buyer and seller. It is customary for the buyer’s legal team to initiate the first draft of the definitive agreements in a traditional Amarillo sale transaction. Many compromises will be made at this stage.
7. Facilitate the closing process – Keeping the deal on track in the weeks and days leading up to a closing should be the M&A advisor’s number-one job. Common “deal killers” include price and valuation changes, terms and condition changes, 3^rd party challenges, and other preclosing mistakes (impatient, indecisive, leaving loose ends, etc.).

Valuation 

When deciding when and how to sell a business in Amarillo, it is important to get an appraisal (formally called a valuation). The same business can have multiple values depending on the purpose and use of the valuation. Investment value is the value of an Amarillo business interest to a particular investor, given a set of specific investment criteria. Owner value, for instance, is the value f a business in the individual owner. Typically, a seller needs to know what the value is to him or her but must understand that value will more likely be different than the value to the buyer. It is the Amarillo business advisors job to make sure the seller understands both.

Financing

In many instances, the distinction between selling an Amarillo business and raising capital is measured by the amount of equity sold and the contractual rights obtained by the buyer or investor. Financing growth and acquisitions raises the issues of long-term shareholder objectives, which most of the time involves eventual liquidity. The use of significant amounts of debt to finance the purchase of an Amarillo business has a number of advantages as well as risks. Unforeseen events such as a recession, litigation, or changes in the regulatory environment can lead to difficulties meeting scheduled interest and principal payments. However, interest payments are used as a tax shield. Large interest and principal payments can force management to improve performance and operating efficiency. 

Ethical And Professional Standards

As with other more mature professions such as accounting and legal professionals, Amarillo M&A and corporate financial advisory service professionals have an obligation to the public, their profession, the organization they serve, and themselves, to maintain the highest standards of ethical and professional conduct. The National Association of Certified Valuators and Analysts (NACVA) has trained over 35,000 CPAs and other valuation and consulting professionals in the fields of business valuation, financial litigation, and various related specialty services serving the Amarillo business community.