As we discussed last time, the benefits taken by you the owner should be carefully examined prior to any healthcare recruiting firm sale. Another important factor: Take a close look at your company’s liabilities.
Carefully consider the tax consequences of the sale, both to you and to the buyer. In most cases a buyer will want to purchase the assets of your company, not your stock. (If you are a c-corp this may be different.) Why does a buyer not typically want your stock? Stock in the company represents all assets, along with all liabilities.
A purchaser has no interest in the current, or future liabilities of your company. Some of the liabilities to consider are short and long term debt, notes payable to investors, the balance of any lease agreements.
It is imperative to take some time and analyze all your equipment payment agreements carefully, as some will have auto-renew provisions that require notice of cancellation 30, 60, or even 90 deements, or any other agreement that binds the company to any short or long term financial commitments. Those leased copy machines, automobiles, and rent payments will suddenly move from the income statement as monthly expenses to a current liability due at time of sale, unless the buyer has agreed to assume them, which is highly unlikely.
One more note on current and/or future liabilities, as a staffing agency you have had dozens or even hundreds of employees that have provided services on a subcontracted basis. Any claims that arise from negligence on behalf of your staff can arise long after the sale of your company assets. Unless you sold the stock, these claims will be your responsibility, albeit through the entity you still hold. Check all your insurance policies for premium coverage periods, and whether coverage is for date of occurrence, or date of claim. Most companies can provide “tail” coverage that can protect you for a period following the sale.
