Doron F. Eghbali Buying and Selling of Businesses Law Blog on Lawyers.com

Some business owners are contemplating sale of their businesses in rather frightening economic conditions. Such business owners are undoubtedly experiencing problems finding willing, ready and able buyers. And even if such buyers are found, the buyers are asking for much less. Let us analyze if there is anything sellers could reasonably do to facilitate the sale of their business nowadays. Unfortunately, the options are limited.

SOME BACKGROUND

Business sellers are experiencing rather similar woes as are home sellers. In fact, a confluence of factors, including tight credit, fearful buyers, volatile economy and sellers unwilling to sell at rock-bottom prices, has led to a marketplace where deals are relatively scarce to come by.

SOME POSSIBLE ALTERNATIVES

1. HELPING OUT PROSPECTIVE BUYERS WITH MONEY

This seems oxymoron to think of helping out buyers of your business with money. Nonetheless, if you are really contemplating sale of your business at times when credit is tight and you have a figure in mind you do not want to radically compromise on, this seems the only alternative.

The way this arrangement could work mostly depends on what you and prospective buyer feel comfortable with. Nevertheless, some buyers could obtain some kind of loan from The Small Business Administration (SBA). Such SBA funding is often inadequate to cover the whole transaction costs. Accordingly, the seller could come in and provide some kind of financing to cover the existing gap. Prospective seller could, for instance, agree to finance half of the deal over a five-year period or so.

This is important to note such alternative means often cause some complexities, more importantly:

• What should the terms of such financing be?
• How certain should seller be of buyer's continuous payment of the selling price over the financing period?
• What measures should seller put into place to ensure continuous payments over the financing period?

2. WAITING FOR THE MARKET TO RELATIVELY REBOUND

The other alternative is just wait for the market to recover and for credit markets to open their spigots. This means when lenders are more willing to extend credit and businesses feel more confident about the future. It is important to note, such proposition has some drawbacks including the fact many business owners feel frightened about the prospects of a double-dip recession. Furthermore, many sellers are baby boomers who just want to liquidate, get the money and retire.

This alternative seems to be the only option if you do not want to wait for a recovery, feel scared of this economy and scared a prospective buyer won't pay you if you help the buyer with financing.

In fact, in such economic conditions, it seems there is no easy answer for sellers and buyers, as both groups are frightened of prevailing economic uncertainty.

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DORON EGHBALI is a Partner at the Beverly Hills Offices of Law Advocate Group, LLP. He Primarily Practices Business , Rea l Estate and Enter tainment Law. Doron Can Be Reached at: 310-651-3065. For More Information, Please, Visit: Here.