Liquidation vs Selling your Business
There is a lot to be considered before selling a business. The first thing to do is to have a valuation of the business by a valuation specialist. This will give you a picture of the value of the business. From here it can be determined if the business should be sold as a whole, in parts or if it should be liquidated by selling the assets off separately. Sometimes in rare cases the assets are worth more than the business.
Selling your business is a difficult decision, because so much of your life and work has gone into building it. With liquidation the business will cease to exist and the employees will no longer have a job. Employees may be due salaries, severance, leave balances and more. These costs may make voluntary liquidation not an option. A business broker can help guide you in this situation.
Owner’s often value assets at more than they are really worth. A careful valuation of assets is needed to determine actual market value. This will allow for a sound decision as to the best way to divest yourself of your business. In a voluntary liquidation, creditors are paid first. There must be enough money to pay creditors or the seller will be left with debt after the liquidation. If the liquidation is part of a bankruptcy the court will payout the proceeds to the creditors in accordance with the bankruptcy plan and then the remaining debts will be discharged.
Liquidation is a last resort. A business that is profitable is generally worth more than it’s liquidation value and can be sold as a going concern on the open market. Often business owners do not understand the liquidation process and all that it implies. They may not realize that the business has value and can be sold as a going concern. All options should be considered before deciding on how to dispose of a business. In rare cases, when the assets are worth more sold separately than the business as a whole, voluntary liquidation may be the best way.
For additional information, contact Florida Business Broker, Richard Zarzecki today!
