Preparing Your Business for Sale?

When it comes to exiting, timing is everything -- and that is true in business as well as in life. Once you have established that it is the best time to sell your business and move forward into the next phase of your life, smart preparation is critically important. Often, it can make the difference between a timely sale at your preferred price -- and a bungled process that results in disappointment for everyone involved.

With that in mind, let us take a closer look at some key steps to take before beginning the sale process.

The Checklist for Successful Business Sales

Selling a business is a lot more complicated than settling on a price and handing over the office keys. Fortunately, by applying a bit of structure to the process, you can make it less daunting and substantially increase your odds of success. Here are the most important elements to consider:

• Answer key questions about your business. First, you need to establish a valuation, as understanding what your business is worth is critical to everything that follows. It is also important to understand what the net profit of the sale will be (the sale price minus things such as fees and taxes). If the valuation does not align with your expectations, that is not necessarily a deal-breaker. There are often simple changes that can be made to improve problem areas and raise a valuation.
• Prepare for the due diligence process. Most buyers will want to rigorously examine what they are buying. This means you will need to have incorporation documents, charts, bylaws, equity arrangements, meeting minutes etc. organized and ready for perusal. This can be a time-consuming process, so it makes sense to get started early.
• In the same vein, you will also need to have all relevant tax documents ready for examination. The goal here is to establish that you are current with your taxes in all jurisdictions and there are no hidden problems that could derail a sale.
• A list of all material assets should be created. This includes real estate, inventory, equipment etc. It is also necessary to detail all intellectual property held by your business, including trademarks, patents, trade secrets and licensing agreements.
• Finally, a comprehensive list of all contracts needs to be provided. This includes things such as agreements with customers and vendors, partnership agreements, financial contracts, franchising contracts, employment contracts and non-competes and all accounts receivable and payable.

What Else Can I Do to Ensure a Successful Sale?

Selling a business is not easy. After all, most owners have been too busy building their businesses to master the intricacies of real estate transactions. It is common for business owners to need help with establishing an appropriate valuation, marketing their business for sale, getting the business in optimal selling condition, and meeting all pre-sale requirements.

In such cases, the help of a business broker or private equity specialist can help expedite a successful sale. These professionals are experts at valuation and negotiation and they often have deep knowledge of potential buyers within every industry and sector.

By working with a professional and preparing effectively, you can help ensure that you sell your business at your preferred price and within your desired timeline.