Rhonda Poston

To sell or not to sell . . . that is the question for many private haulers. For some, it can be easier to sell their company than restructure for compliance or face the intense competition from national companies.

The Resource Conservation and Recovery Act (RCRA) and capital gains taxes were just a few of the changes the industry felt last year. As a direct result, acquisitions, mergers and sales were numerous in 1993.

Items To Consider Before selling your company, you must consider environmental liability, taxes, employees and future growth.

The number of tons handled - whether solid waste, recyclables, hauling or disposal - is the key to market position. Deciding to sell your company may sacrifice the efforts you made in the marketplace or your company's position in the marketplace.

Remember, if you choose to entertain a purchase proposal for your firm, many companies will be anxiously awaiting to gather information.

It is important to protect yourself from carelessly revealing your business plans to competitors. To prevent this, you can require purchasers to sign a confidentiality agreement. A confidentiality agreement will allow the purchaser to provide information about your company to people within their organization, but to no one else.

Trust is a very important element in the sale of your company. If you do not trust the purchaser, look for another. Ask yourself if the buyers' and sellers' goals and needs coincide.

It can be difficult to attach a dollar value to the hard work and long hours that went into building the company. Unfortunately, no formula exists to determine the company's value.

To create your own formula, assess the goals and needs of both the seller and purchaser. For example, the purchaser may have a goal of only acquiring companies that have a minimum 20 percent pre-tax margin.

What Do I Do Next? After verbally agreeing to the business terms of the purchase agreement, the next step is to sign a Letter of Intent, a legal document that outlines the purchase agreement. At this point, it is essential to include all items that are important to you. Do not go into great detail, but make sure to address the items of concern and how they will be handled. As a legal binder, the Letter of Intent restricts the seller from negotiating with another company.

To flush out any potential problems, get advice from your attorney, accountant or any other advisor you know to be knowledgeable in these matters. An attorney's advice can assure you that all the specific details are covered.

The transaction becomes more complex after the Letter of Intent is signed and the Due Diligence process begins.

Due Diligence, when the purchaser begins to learn every detail about your business, includes reviewing existing business, future business, potential business, accounting records, regulatory records, litigation, employee responsibilities, assets and debt information. The Due Diligence process can take up to three or four months, depending on the size of your business.

While in the Due Diligence stage of the game, a lot of time will be spent negotiating the details of the purchase agreement and disclosing business plans. To prevent later complications, disclose any difficulties now - past, present or future.

The purchaser may also require an outside audit of your accounting records. If you have long-term debt, the purchaser can assume the debt or pay it off as a part of the transaction. The seller is responsible for his or her own legal and accounting fees from the sale.

Wheelin' And Dealin' A good support team is essential to make the transaction run smoothly. Accountants, lawyers and engineers can offer the support you need. Accountants, for example, can help with post-acquisition tax planning. Your accountant can also suggest stock transactions or other creative ways to shelter from tax for a period of time.

Because a transaction can be structured any way you want, you should confide in someone who understands you and your business. After all, the deal is only as creative as the seller and purchaser. Options include cash for assets, cash for stock, stock for stock or merging. Sometimes purchasers are only interested in acquiring the signed contracts that you have acquired and want to take over the operational responsibilities.

Since you are in a market position to be considered for a purchase, the purchaser usually will require a Non-Compete agreement from you and sometimes from some of your key employees. The radius of the Non-Compete may be as far as 50 to 100 miles from your current business. If you are to receive the purchaser's stock, be sure to understand any restrictions on the stock and the tax consequences.

Keep in mind that this process can hamper your current business activities since it will require a lot of attention. Also, going through the motions does not mean the sale is a done deal. Large companies typically have many layers of management who will approve the purchase.

Signing Off The most difficult part of the final legal document is the representations and warranties section. It is important to clearly understand what you are representing to the purchaser. Experienced legal counsel can be effective in this area too. To keep interruptions to a minimum when negotiating, hold the meeting outside of your office.

After the legal documents are complete and signed, your company is officially sold. This is when you will receive your money or stock - but remember that the final transition touches must now be made.

During the transition period, the purchaser will take over the operation. Depending on the complexity of the transaction and the needs of the buyer, the transition period can last anywhere between two weeks and two months. Sometimes the purchaser will ask you to remain with the company for a while. This way, the purchaser is ensured of continuity and can maintain political relationships.

Do not let seller's remorse get to you. After months of the transaction process, you should know if this transaction was right for you or not. If seller's remorse should persist, use the energy from your anxieties to hope that your company will be successful in the hands of its new owner. After all, we all want our legacies to flourish.