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W EEKLY EDITION SEPTEMBER 5, 2 018 P AGE 4 CONTINUED ON PAGE 6 Legally Speaking: Selling a Rental Business WAITE SPEAKER CONTINUED FROM PAGE 1 Although each transaction is different, some common planning issues should be considered by virtually all potential sellers. Here are the most important, in my opinion: - Consider your personal objectives. You don't necessarily have to make final decisions about everything before getting started, but it's good to have a general idea of what you'd like to accomplish in terms of: • Sale price — how much and when the sale proceeds will be paid to you. • Continuation of the business — will it continue in its current form, be dissolved or be absorbed into the buyer? • Continuing or not continuing to work in the business after the sale closes. What do you want to do after th e deal closes? • Working for someone else, perhaps a competitor, at some point after closing, knowing that you will almost certainly be required to sign a non - competition agreement as part of the transaction. • Providing for your employees — such as cont inued employment, wages, salaries, insurance, bonuses, benefits, promotions and/or perhaps even a portion of the sale proceeds. • Liability issues — usually involving efforts to avoid or limit existing and potential liabilities, and eliminate personal gua rantees of company debts and contract obligations. • Post - closing income — for example, real estate which continues to be owned by the seller and is leased to the buyer after closing. • Tax effects — these can be very different, depending on the structur e of the deal, such as assets vs. equity; cash vs. installments; and employment vs. consulting vs. earnout vs. lease payments. - Measure twice, cut once. After making preliminary decisions regarding the previously raised issues, but before spending a grea t deal of time and money preparing your business for sale or contacting brokers and potential buyers, contact your accountant or a business valuation consultant, and get a realistic assessment of what your business is worth. It makes no sen se to spend valu able resources pursuing an unattainable target. - What light in yonder window breaks? What is "attainable" depends to some degree on the current state of the market, your location(s), your asset ages and values, and your business prospects. In my experie nce, most private, non - public equipment rental businesses have generally proven to be worth somewhere between 4.0 and 6.5 times earnings before interest, taxes, depreciation and amortization (EBITDA), which in this industry, often works out to close to 1.0 to 1.2 times annual revenues.