Archive for the ‘Business’ Category

How to Sell a Business

Tuesday, November 3rd, 2009

Few entrepreneurs run their business with the intent of selling it. Most people, especially the owners of small businesses, run their operations with an eye toward bettering their current personal financial situation, maximizing their cash intake, and minimizing their tax bill. That’s fine for a time. After all, while income tax evasion is illegal, income tax avoidance is downright patriotic. But if you do decide to sell your business, and you’ve run it in this manner, you’ll be facing a problem. Simply put, tax minimization can affect your business’s apparent viability.

All of your business’s documentation and records show the maximum expenses and perhaps deferred income. Now that it’s time to sell, you want to do the opposite: play down your expenses and play up your income. That means buyers will be faced with a choice: they can believe you or they can believe your numbers. Unless you’re desperate to sell quickly, don’t care about getting what your business is actually worth, or are prepared to take cash for its book value, you’re going to have to do something dramatic to get the buyer to go along with your stated rather than reported numbers. You can try to help the buyer and her professional team analyze your records in a way that lends credence to your statements, but that’s rarely enough. Any savvy buyer will adopt the cold war adage: “trust but verify.” The solution is for you to take back paper.

The compromise is generally that the seller takes back a note equal to the amount of value that cannot be documented. The note comes due at an agreed upon point when the buyer can see from the operations of the business that the seller’s claims about income were, in fact, accurate. If the claims don’t hold water, the note is canceled and the sale is made entirely on the basis of the documented numbers. It sounds complex, but it’s a process hundreds of people go through each and every day with the assistance of accountants and lawyers who specialize in just this type of transaction. Their fees are the price you’ll have to pay for having run your business more like a mom-and-pop shop rather than a multinational corporation.

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How to Face Terminations

Saturday, October 24th, 2009

It’s not surprising that termination problems are among the most disturbing hurdles to many people. I know, it’s of no consolation at first, but it’s important to understand that termination fears, while understandable, are really irrational. They are almost all expectant fears (after all, you’ve already been fired) and are actually fairly simple to overcome.

In the more than two decades I’ve been involved in hundreds of termination negotiations, some quite acrimonious and a few of which ended up in litigation. Yet, in all that time I have never seen a legitimate initial severance offer taken off the table after an effort was made to negotiate it upward. And I have never heard of a company giving a negative reference to someone who was fired without cause. In fact, I’ve never even heard of someone who was fired for cause actually being given a “bad” reference.

Having had the ground cut out from under them, few people realize just how powerful they are in a termination scenario. Think about it for a minute. What is an employer’s leverage over an employee? His job. Once an employer fires you, there’s literally nothing more he can do to you. He is now powerless over you. It’s you who now has all the leverage. It is in your power, not the employer’s, to make the process quick and clean, or long and dirty. You hold all the best cards, albeit in a losing game. Recognize that, and you’ll be able to play your hand for all it’s worth.

What if they give you a bad reference?

This is only a presenting problem if you’re feeling guilt over having done such a bad job that you deserved to be fired, or if you really are in an industry¡ªsuch as day care¡ªin which positive references are essential. In the latter case your problem really is “what if they don’t give me positive reference.” In every other situation this is an actual, if irrational, problem.

Companies today are so worried about possible litigation that they generally refuse to give any reference, other than stating that someone indeed worked for the company for a stated period of time. That goes even for people who were fired for cause. Some organizations may provide additional details, such as job titles, but few, if any, will offer any subjective comments.

The only real expertise you need in this case is the knowledge that a negative reference is very unlikely, and that severance packages are negotiable, giving you an opportunity to ask for a positive reference as part of your package.

While the trust you generated on the job wasn’t sufficient to keep you from being terminated, reinforcing it with a personal meeting and conversation might be enough to insure that your superior will be willing to write and sign a positive reference letter.

Generally, requests for a positive reference are turned down for reasons of company policy. The best way to turn that no around is to ask your superior to instead write a personal letter of reference, as a favor from one friend to another.

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