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UNLOADING THE FAMILY BUSINESSThere's a whole industry to helpYour Uncle Ernie just passed away and left you his successful office supply store. Too bad you have no interest in owning or running it. No problem: There's an entire industry to help you and other reluctant business owners dispose of unwanted companies. Assessing the value of your business should be the first thing you do, advises Tom West, a business broker in Concord, Mass. You can hire a certified business appraiser, who will estimate the value of the physical assets and intangibles, such as the company name, to determine a fair price. SAVE ON FEES. Four different trade groups --the American Society of Appraisers in Herndon, Va., the National Association of Certified Valuation Analysts in Salt Lake City, Boynton Beach (Fla.)-based Institute of Business Appraisers, and soon, the American Institute of Certified Public Accountants in New York---certify appraisers. Interview several and check references. Do-it-yourselfers can find help in books and software such as the Handbook of Business Evaluation ($95, John Wiley & Sons) or Business Evaluation Systems for Windows ($349, ValuSource). Once you know what your business is worth, finding a buyer is your next task. Depending on your time frame and whether the business is a going concern or just a collection of assets, you can either represent yourself, hire a broker or auctioneer, or call a liquidator. By taking action yourself, you save on fees. Approach nearby rivals who may want to buy market share, or distant competitors wishing to expand into a new market. Should the sale require marketing, locating prospective buyers, or structuring and negotiating a complex deal, it's best to use a broker, although brokered sales commonly take over a year to complete. ''Brokers act as an orchestra leader for the whole process,'' says John Johnson, president of International Business Brokers Assn. in Reston, Va. But don't rely on a broker alone. Specialized tax and legal advisers can ensure you are getting the most from the deal. Brokers bring the buyer and seller together, usually charging the client a minimum fee of $10,000, but small businesses can often find a broker who will take an hourly fee of $75 to $150 to advise you on handling your own deal. Check the yellow pages, banks (which often oversee liquidations), or the business opportunities section in your local Sunday paper to find a broker. If your business is closing, the highest cash value is usually realized from a going-out-of-business sale or orderly liquidation. Prices are slowly reduced as equipment and inventory are sold. Some auction houses run liquidations, which take up to 90 days and are only worthwhile when assets are in demand. If you're pressed for time, consider an auction. In just four to six weeks, an auctioneer can unload your company. Although auctions can be used to sell ongoing businesses, they're more often a fast route to unload goods. Some auctions use minimum bids, and some are reserve auctions, where sellers can remove an item if it doesn't bring a desired price. Others unload everything to the best bidder regardless of the price. Auctioneers take a percentage of the sale, usually 20%, equally split between the buyer and seller. The smaller your business, the larger the auctioneer's take, with fees ranging from 30% to 3% for large government auctions. They may also charge a separate, up-front negotiable fee for other services such as advertising. JUST LEAVE IT. The Overland Park, (Kan.)-based National Auctioneers Assn. (913 541-8084) prints a directory of its members, but auctioneers can be found through bankruptcy courts, which often force auctions. As always, interview and get references. The lowest-fuss sale--and the lowest return--is to a liquidator. Liquidators buy assets of shuttered businesses hoping to resell them at a profit, generally looking for at least a 50% discount to market value. There's no trade group for liquidators. So check the yellow pages, or find used-goods dealers and ask them where they get their stock. Unfortunately, some businesses are in such bad shape that no sale will recover the cost to sell it. If the lease doesn't require you to clear the building before vacating, you can leave the goods. ''It can be very cost-effective to abandon the company,'' says Glenn Plotsker, executive vice-president of Commercial Liquidating Associates International in New York. But you will still have to deal with taxes and debts. Whatever avenue you choose to get rid of a relative's business, take your time to walk through the options. After all, your loved one probably thought he was doing you a favor. ADVICE: Assess the business' value. If time is more important than money, do an auction
By Roy Furchgott
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Updated June 15, 1997 by bwwebmaster
Copyright 1997, by The McGraw-Hill Companies Inc. All rights reserved.
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