Over the course of 2020, the Covid-19 crisis has prompted many different reactions, in both consumer and business behavior. Business people have been extremely creative in their solutions to the challenges presented, some more successful than others.
Just as individuals have tired of the never-ending challenge, so have business owners. This situation has lasted long enough that many businesses that had planned to make changes by now, or even to retire or sell out and move on, have been stymied by the terrible business environment. Eventually, though, people grow to accept circumstances, and re-calculate their opportunities, indeed their future, under the “new normal” rules. It’s one of our strengths, part of our genius, really that, while we fight like hell to win as long as we can, eventually we recognize that the business environment is bigger than we are, and we have to adapt. Looking at the future with a clear eye is critically important, especially at times like these.
We have seen a lot of business owners conclude recently that the time to move on is here, and have made appropriate adjustments. That has resulted in an unusual number of businesses being sold.
There are many dimensions to the sale of a business, depending, of course, on the kind of business it is, and how this particular business is structured. Is the sale of the business location, the real estate, part of the scenario? If so, all of the complications of a real estate transaction – financial, legal and practical are added to the business sale fundamentals. Or perhaps, the business operates in leased quarters (the traditional business sale), or maybe the lease is up or the rent is just too much to continue at that location and expense level. Selling a business that is going to have to move to a new location is known as a “business opportunity,” which sounds hard, but can be done.
The next layer of detail relates to the (tangible) personal property involved, i.e., equipment, tools, supplies and inventory. Equipment that is attached to the building is known as “fixtures,” and the right to remove it depends on the language of the sellers lease. Of course, business equipment and inventory is sometimes burdened by debt, through the recording of a financing agreement, also known as a UCC-1 form, kind of a chattel mortgage. A search must be made, and payoff terms determined.
Next comes intangible personal property, such as the business name, trademarks, business secrets, websites, non-compete agreements, employment agreements, and even social media assets.
This, of course, is just a starter list. You may want to talk to your attorney and accountant.