Is this offer good for my town?

The short answer

In our view, an offer is good for your town if the business stays open, the jobs stay, and most of the money stays here. If you cannot tell, slow down. A good buyer will not mind waiting.

Five questions to ask about any offer

1. Who will own it in five years? Ask the buyer to say it out loud, and write it down. A company can be sold again.
2. Where will the profit go? Into the town (wages, local suppliers, the local bank) or out to a far-away owner?
3. What happens to the people who work there? Ask for the promise in writing, and for how long it lasts.
4. What happens to the name, the customers and the way you do things? Will the sign stay? Will prices stay fair?
5. Can you get it back? If the buyer fails or closes the doors, who ends up with the building, the tools and the customer list?

What a good offer often looks like

• The buyer is known here, or is glad to meet people here.
• The price and the terms are plain, and you understand every line.
• You may talk to your family, your banker, a lawyer and an accountant before you sign.
• No one rushes you. Weeks and months are normal.
• The promises are in the contract, not just spoken.

Signs that deserve a second look

These are signs, not proof. Many outside buyers are honest and good for a town. A sign only means: ask more questions.

• Pressure to sign fast, or to keep the sale quiet from your own staff.
• A buyer who will not say who is behind the company.
• A price far above what the business earns, with strings you do not understand (see KL-0204).
• A promise to 'keep everything the same' that is not in the contract.
• Most of the pay is future promises or shares, not cash on the day you close.

Ask who is behind the company

In Texas, many corporations and LLCs send the state a Public Information Report every year. It names any company that owns 10 percent or more of them, and any company they own 10 percent or more of. The law says the information in that report is open to public inspection. Some businesses do not have to file one, and it shows other companies, not always the people behind them. It is still a good first thing to ask about: who owns the company that wants to buy mine?

You can ask the Comptroller for a copy of a company's report. See the sources at the bottom of this page, and KL-0702.

Do this before you answer

1. Write down what you want this business to be in ten years.
2. Ask for the offer in writing.
3. Look the buyer up in public records (KL-0702 shows where to start).
4. Ask two local people who might want the business whether they would like to see the numbers (KL-0401).
5. Talk to a lawyer and an accountant you trust.
6. Sleep on it.

If you remember one thing

You are allowed to ask questions and to take your time. An offer that cannot wait for your questions is telling you something.

We are not lawyers or financial advisers. This is education, not advice. Talk to a lawyer and an accountant before you sign anything.