• How to Sell a Business in California

How to Sell a Business in California

Congratulations! Selling a business in California is a huge milestone. From getting a business up-and-running, to developing customers and continued growth, selling a business in California is a true sign of success. Read on to learn more about how to sell a business in California.

Steps to Sell a California Business

Business owners must take many steps to sell a business in California. As a business owner, the first thing you should do when selling your business is determine your business sale type: asset versus entity sale. An entity sale consists of business stocks or membership interest. An asset sale includes all the assets and liabilities of the business. An asset sale allows a buyer to pick and choose an asset without assuming liabilities. An entity sale is more advantageous to a business owner because it allows him/her to sell the entire company along with associated liabilities. A business entity should be in good standing with the state before selling.

“So happy to have found A People’s Choice to help me with the legal documents I needed to sell my small business.” F. Benson
“They helped me prepare everything I needed for a smooth and easy transaction at a very reasonable cost.” F. Benson

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First, get a business valuation before you sell a business in California. Most certainly you will want to research the sale price of other businesses in your industry. In this regard, it is best to get an expert opinion from a business valuation expert (accountant, business broker, or business appraiser). Once you know what your business is worth, you will be able to successfully market it for sale.

As you prepare to sell your business, you must develop a sale agreement. Work with an experienced legal document preparer who can help you prepare your agreement. The agreement should accurately describe all the terms of the purchase. The following terms should be addressed in your agreement:

  • Names of seller, buyer and business
  • Detailed description of the asset being sold
  • Purchase price of asset
  • Terms of the sale including payment
  • Business transition information (who will run the business during the sale transaction)
  • Date of closing
  • Access to business information

Next, review internal company documents and get your business affairs in order. As a seller, you want to make sure there is a smooth transition with the new owner. Most importantly, work with a skilled negotiator to find potential buyers and get the best sale price for you. Once you enter into an agreement in principle with a serious buyer, be ready for a business inspection. A buyer will inspect your business to make sure everything checks out before approving/entering into the final sale transaction.

Finally, thoroughly document the business transaction. For example, depending on how you document the sale of your business, you may need a variety of legal documents. Common documents used to sell a business in California include a promissory note, security agreement, confidentiality agreement, non-compete agreements, company resolutions, or stock transfer certificate.

Lastly, when you sell a business in California you will want to immediately close its bank accounts, cancel your general liability insurance and file any necessary documents with the California Secretary of State.  You will need to follow many steps in winding up your business interest. A People’s Choice offers many business services. Contact A People’s Choice for help in drafting the necessary legal documents to sell a business in California. Call today at 800-747-2780 for immediate help.

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By | 2018-01-18T15:46:10+00:00 July 15th, 2017|Business|0 Comments

About the Author:

Sandra M. McCarthy, founder of A People’s Choice Inc., has worked exclusively in the legal field since 1976. She served as the 2004-2005 President of CALDA (California Association of Legal Document Assistants). She obtained a Paralegal Certificate from the University of California, Santa Barbara. During her career in the legal field, she has worked as a freelance paralegal, law office manager and paralegal studies teacher, and has co-authored numerous legal publications and written hundreds of self-help legal articles. As a registered Legal Document Assistant, Sandy is dedicated to providing affordable, low-cost, self-help document preparation services for California consumers in all 58 counties.

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