Friday, 12 May 2017

Preparing a Home Business for Acquisition

The availability of internet connectivity globally has made the operation of home-based businesses a significant reality. Entrepreneurs who have dreamed of running their own companies can now do so without inconveniences. With communication and service delivery so simplified nowadays, the number of home-based companies has increased.
The 2011 results of a Survey of Business Owners conducted in 2007 showed that 51.6% of the respondents were conducting business from home. Almost a decade down the line, that number has continued to rise. The success of some of these enterprises has put the traditional corporation on alert with executives making acquisitions left right and center. For an entrepreneur looking to sell their home-based entity, knowing how to prepare can ensure you maximize on the transaction.
Get the Paperwork in Order
Just because a company operates from home does not mean it doesn’t have to adhere to regulations. There are still taxes to pay, registrations to make, and licenses to update. When preparing for acquisition, all these documents will be necessary. If the process is to go smoothly, then files must be complete with all the contracts, minutes, supplier information, payroll (if it applies), financial documents, and everything else of importance. Be sure that the buyer will want to get all that data, and that means the more prepared you are, the more efficient the transaction will be. Early preparations mean that you can sort out details that may not be up to date.
Disclosure Schedule
During the acquisition of any enterprise, a disclosure schedule is one document that cannot be neglected. This document is generally a list of the vital elements of a company such as contracts, employee details, litigation, intellectual property, warranties, exceptions to representations, equity holders and share options among others. Preparing a disclosure agreement takes a considerable amount of time and is very particular. Every figure and sentence has to be precise- from the description of the contracts to the software that a business uses. According to, wrong or inaccurate information can lead to liability issues for the selling company. To avoid jeopardizing the transaction, start working on the disclosure deal well in advance. Note that it may take several drafts to get a disclosure schedule correct.
Professional Evaluation
It would be irresponsible to consider an acquisition without knowing the worth of a home-based enterprise. Regardless of its size, hiring an independent evaluator is essential when contemplating a sale. Acquisitions come with room for negotiations, but that would be a bit difficult to do adequately when you are not sure what a business is worth. During negotiations, a seller will want to keep the downward adjustments to a minimum. Aspects such as capital, employee issues and quality of a company will all factor in. Be sure that a buyer will conduct the same research before making an offer.
An independent evaluation can also tell you if it’s the right time to sell. You may find that waiting a few months may make substantial differences in a transaction. For instance, if you have issues with finance, you can work with one of the best credit repair companies to fix it before calling in a buyer. An evaluation can also bring out some employee troubles that you may not have been aware, giving you a chance to solve them in time.
Getting Legal Counsel
Mergers and acquisitions are naturally tricky and can be troublesome for an entrepreneur who has not had experience dealing with large corporations. Having a business attorney with expertise in M&As will prove very beneficial, especially in structuring deal terms. According to Forbes contributor, Richard Harroch, some issues may cause contention during the process. These include amount and nature of escrow holdback, nature of representation of warranties, the language of Disclosure schedule, nature of applicable covenants, adjustments to price, and handling of employee options, just to mention a few. An M&A lawyer can guide you through these challenges and ensure that all procedures are legal. Additionally, you get help with the preparation of documents, especially licenses.