Three Often Overlooked Steps for Maximizing the Value of Your Business When Selling

Like preparing a house for sale, when you are preparing to sell your San Diego business, there are many well-known preparatory steps to take. Many of those steps include various strategies for cutting costs and enhancing revenues. In general, a profitable business is the best type of business to sell and the one that maximizes its sales price. In this article, we discuss three other steps that are little-known that can also help maximize the value of your business. These are steps that help solidify assets and help assure any potential buyer that the price being paid is a good price. Consulting with and getting advice from a good San Diego corporate attorney will help.

Ensure Proper and Solid Vesting of Intellectual Property Rights

Intellectual property is one of most valuable assets that are typically sold with a business. At the same time, the value of intellectual property is often understated when included in the price paid for an ongoing business. This is often partly a result of uncertainty about whether the intellectual property is properly vested in your business. However, if you plan ahead and ensure that all of your intellectual property is solidly vested in your company, then your intellectual property can be given its true value, which helps maximize the sales price. With respect to trademarks, copyrights, and patents, these steps include regulatory filings and registrations. This is particularly important with product names, logos, slogans, and similar marketing copy. These are intellectual property assets that are often overlooked.

With respect to trade secrets, you should ensure that adequate steps have been taken and policies have been put into place that protect and keep those trade secrets “secret.” Proper policies and procedures would include identifying and listing trade secrets, keeping them in a centralized location, securing and locking said location, training employees with respect to maintaining secrecy, etc. See our longer discussion here.

Taking these steps to perfect your rights with respect to intangible property is as important as having a bill of sale and/or a deed for tangible and real property.

Ensure Key Employees are Under Contract (but With Flexibility)

Often, the key to selling a business for the best price is selling the business with its key employees in place. If your business thrives because of good staffing and worker talent, one often-overlooked step in maximizing the value of your business is to put key employees under contract (but with some flexibility). This involves talking to said key employees and letting them know that you are thinking of selling the business. This can help, actually. If the key employees know that a change is coming, but that there is a place for them with the new owners, that can relieve possible anxiety about job security. Furthermore, putting key employees under contract can provide assurances to them with respect to salaries and benefits. In this manner, you maximize the value of your business by avoiding “worker flight” and by cementing in the key employees for potential buyers.

At the same time, it is important to be flexible with the employment contracts just in case the new owners want to bring in their own employees/staff.

Ensure Key Business Relationship are Comfortable With a Change

In the same manner, if your business has key vendors or clients or has a commercial lease or some other key business relationship, it is very important to explore the change in ownership with those third parties. If you are able to assure a potential buyer that an ownership transition will go smoothly with key business partners, that will help maximize your sales price.

Contact San Diego Corporate Law Today

If you are planning to sell your San Diego business, contact an experienced business lawyer like Michael Leonard, Esq. of San Diego Corporate Law. Mr. Leonard can draft or review the sale/purchase contracts, help conduct the due diligence, ensure compliance with taxing and regulatory authorities, handle lender, title and UCC issues, and make sure your sale is successful. Mr. Leonard has been named a “Rising Star” by SuperLawyers.com and “Best of the Bar” by the San Diego Business Journal. Contact Mr. Leonard via email or by calling (858) 483-9200.

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