While some Colorado business owners may want to spend their lives with their companies, others look forward to selling off the business. Some people may look for potential in selling to a larger company, while others may look forward to retirement. In either case, people want to see all of their work result in a profitable outcome. However, some business owners may face unexpected difficulties. There are certain guidelines that people can keep in mind that may help them make the most of selling their business.
For many Colorado business owners, mergers and acquisitions can be an important way to expand their enterprise by bringing on former competitors. However, negotiating a successful one can be complex for companies of any size and in any industry. Especially for larger corporations, some mergers may even face official opposition. In New York, officials announced that they were joining Colorado in ending their legal battle to stop the combination of two major wireless companies after a judge approved the agreement. T-Mobile and Sprint, two of the nation's largest mobile phone service providers, are merging in a $40 billion deal.
A business owner in Colorado may decide to close their business for a number of different reasons. Sometimes, a business isn't profitable anymore, so selling it makes good financial sense. In other cases, a business owner may simply wish to move on to other interests. Whatever the reason for closing, the owner must take appropriate steps to dissolve the business correctly.
Business owners in Colorado who are thinking about selling their business may want to start the process sooner than later. Economic uncertainty makes timing critical. If an owner can wait about five years, there is no problem. However, if a person wants to sell in one to three years, now would be a good time to start the process.
When business assets are sold in Colorado or any other state, the seller may have to pay capital gains taxes on any profits realized. Capital gains can be categorized as short-term or long-term gains depending on how long an asset was held. Short-term gains are generally taxed at an individual's ordinary income tax rate while long-term gains were taxed at 17% as of 2018.
Medicine Man Technologies is based in Denver, Colorado, but it is looking to grow into a national or international business. It has recently spent more than $300 million on entities both in Colorado and in other states. These acquisitions have increased the company's revenue from roughly $10 million at the start of 2019 to about $170 million. The purchases were funded in part by an investment from a firm called Dye Capital in Florida.
Acquisitions and mergers help Colorado companies gain efficiencies and offer other benefits. There is definitely a lot of money being used on these deals; in 2018, $4.6 trillion was spent in the United States on acquisitions. However, one may wonder about the effect it has on employees and what can be done to help them.
Business owners in Colorado may have thought a great deal about how they want to shape their companies. After all, their vision, drive and inspiration led them to want to become entrepreneurs to begin with. However, another important part of business success can include planning for a company founder's exit. Experts advise that an exit plan should be part of a business plan from the beginning, especially as part of understanding an owner's primary goal in launching the company.
Business owners have a few options when it comes to exiting or expanding, and many find themselves buying another enterprise or selling to another party at some point. The process of a merger or acquisition in Colorado can raise any number of legal issues. According to members of the Forbes Business Development Council, the most important things to consider include asking the tough questions, knowing the deal breakers, gathering information and checking the culture fit.
Residents of Colorado who have a privately owned business have a number of options for making their business public, including conducting a reverse merger. Business owners may consider using a reverse merger over a traditional initial public offering, which requires an investment bank to underwrite and issue shares of the business, because the process of a reverse merger is shorter, less complicated and less costly.