What is required to sell a business?

[steffb503]

What is the name of your state? NY
I have a farm and farm business. I am wanting to sell both the property and the farm business. Is there any reason that I should not sell the business for more and the property for less, equaling my asking price for both?
We are asking $550,000. I was willing to sell the business for $25,000. That is what the actual equipment is worth.
I had some one want to pay $350,000 for the property and $200,000 for the business. His reason is it will be easier for his business to get a business loans than he get a mortgage for the higher amount.
Is there any reason i should be concerned?

 

[quincy]

What is the name of your state? NY
I have a farm and farm business. I am wanting to sell both the property and the farm business. Is there any reason that I should not sell the business for more and the property for less, equaling my asking price for both?
We are asking $550,000. I was willing to sell the business for $25,000. That is what the actual equipment is worth.
I had some one want to pay $350,000 for the property and $200,000 for the business. His reason is it will be easier for his business to get a business loans than he get a mortgage for the higher amount.
Is there any reason i should be concerned?

Your question here indicates that you should not try to sell the property on your own.

I recommend you seek assistance from a real estate professional in your area.

 

[zddoodah]

I was willing to sell the business for $25,000. That is what the actual equipment is worth.

What exactly are you selling? Ownership of a business entity? A corporation? Something else? Or just a bunch of equipment?

I had some one want to pay $350,000 for the property and $200,000 for the business. His reason is it will be easier for his business to get a business loans than he get a mortgage for the higher amount.
Is there any reason i should be concerned?

None of the anonymous strangers here can intelligently answer this question. Nor should you be interested in relying on the impressions of barely-informed anonymous strangers.

 

[quincy]

What exactly are you selling? Ownership of a business entity? A corporation? Something else? Or just a bunch of equipment?



None of the anonymous strangers here can intelligently answer this question. Nor should you be interested in relying on the impressions of barely-informed anonymous strangers.

steffb said s/he is selling a farm and farm business. There can be tax considerations and tax consequences for both seller and buyer based on the agricultural assessment value for farmland.

What steffb should find is a farm real estate broker.

 

[Taxing Matters]

What steffb should find is a farm real estate broker.

He should also consult a business attorney and a tax professional familiar with business taxation. There are indeed significant tax issues involved here, and the broker is unlikely to have sufficient knowledge to advise on that. And there will need to be a good contract for the sale of both the land and the business, and the broker's license will not allow him/her to draft a contract for sale of the business. That requires a lawyer.

 

[quincy]

He should also consult a business attorney and a tax professional familiar with business taxation. There are indeed significant tax issues involved here, and the broker is unlikely to have sufficient knowledge to advise on that. And there will need to be a good contract for the sale of both the land and the business, and the broker's license will not allow him/her to draft a contract for sale of the business. That requires a lawyer.

Most of the large real estate companies I am familiar with in my area of Michigan will have attorneys on staff or the real estate brokers will have law degrees. In rural New York, however, that might not be the case.

But, yes, there are enough legal concerns with the sale of a farm business (or any business, for that matter) that consulting with a local lawyer is smart.

 

[Taxing Matters]

Most of the large real estate companies I am familiar with in my area of Michigan will have attorneys on staff or the real estate brokers will have law degrees.

The problem that I see with that is those staff attorneys are there to provide advice to the brokerage firm, i.e. the brokerage is their client. So those attorneys likley could not draft a contract for the sale of a business for the OP, i.e. acting as the OP's attorney in the transaction.

 

[quincy]

The problem that I see with that is those staff attorneys are there to provide advice to the brokerage firm, i.e. the brokerage is their client. So those attorneys likley could not draft a contract for the sale of a business for the OP, i.e. acting as the OP's attorney in the transaction.

The contracts are pretty standard as would be the sale of the property itself. steffb will want an attorney to protect her own interests, however, as will the purchaser of the property.

 

[Taxing Matters]

The contracts are pretty standard as would be the sale of the property itself.

For the sale of the land, the brokerage will be well acquainted with that, will have standard contracts to use as a base for the land sales contract, and all that will be within the scope of what the brokerage license allows it to do. The sale of a business, however, is outside the scope of a real estate brokerage license and isn't something that the brokerage will be equipped to effectively deal with.

 

[quincy]

For the sale of the land, the brokerage will be well acquainted with that, will have standard contracts to use as a base for the land sales contract, and all that will be within the scope of what the brokerage license allows it to do. The sale of a business, however, is outside the scope of a real estate brokerage license and isn't something that the brokerage will be equipped to effectively deal with.

It actually depends on the farm business.

I live on a farm that I purchased several years ago so I know some of what can be involved.

 

[Taxing Matters]

It actually depends on the farm business.

And the applicable state law. In my state and the others in which I've lived, the attorneys at the brokerage could not handle the contract for the sale of the business. But I'm not in NY and never have been. Its laws may be different. Even if the broker's attorneys could do it without violating either the brokerage license or the rules of professional conduct, I would still recommend the OP get his own attorney rather than relying on a real estate brokerage firm for the sale of the business.

 

[quincy]

... I would still recommend the OP get his own attorney rather than relying on real estate brokerage firm for the sale of the business.

I have no argument with you there.

 

[steffb503]

Your question here indicates that you should not try to sell the property on your own.

I recommend you seek assistance from a real estate professional in your area.

I do have a realtor.

 

[steffb503]

He should also consult a business attorney and a tax professional familiar with business taxation. There are indeed significant tax issues involved here, and the broker is unlikely to have sufficient knowledge to advise on that. And there will need to be a good contract for the sale of both the land and the business, and the broker's license will not allow him/her to draft a contract for sale of the business. That requires a lawyer.

Thank you. My tax guy should be my next phone call.

 

[steffb503]

So I guess my real question was if I was originally asking $550,000 for the land and $25,000 for the business, what are the negatives to a buy paying less for the land and more for the business.
It is an established goat creamery. We sell milk and cheese. The business had a wonderful reputation, customer base, branding, equipment, contacts and animals. They would be buying it all.