5 Things To Do Before Selling Your Business

Before selling your business, many things need to be done to have a smooth sailing transaction. While it’s exciting to think about what your business is worth, addressing these 5 things to do before selling your business will help get you on your way. Here we have outlined five critical steps that you should follow before putting your business up for sale.

1. Prepare for the sale

It’s never too early to start preparing to sell your business, especially if you don’t plan to sell immediately. However, as your business continues to grow and make a name for itself, you’ll want to ensure that it is adequately protected and in compliance with all local and state laws. This requires maintaining up-to-date corporation documents such as bylaws, minutes of shareholders’ meetings, along any other relevant documentation.

2. Perform a Detailed Company Audit

Now is the time to do an in-depth company audit and make sure that everything is documented. This includes:

• Short and long term goals
• Strengths and weaknesses of your business
• Documentation for all current assets such as licenses, patents, trademarks, leases, and insurance
• Documentation of all current and future liabilities such as loans, taxes and other financial obligations
• Key personnel within your company and their titles and responsibilities

You’ll want to be sure that you’ve prepared a list of everything present in your business. This will help the potential buyer get a better understanding of your business and help you get an idea of what you’ll be looking at to pay taxes on when the sale is complete.

3. Prepare Financials for Your Buyer

Once your company has been thoroughly audited, it’s time to put together all the financial Documentation needed for a buyer who would like to do their due diligence. This will include past balance sheets, earnings statements, cash flow reports, and any other documents that you use to track your company’s day-to-day operations. It is essential to be able to provide these detailed reports back for at least three years.

4. Have a Clear Exit Strategy

The first thing you’ll need to decide is which Business Broker will be suited best to be able to assist you through the transition and sale process. Working with a knowledgeable Broker who has obtained  a certification as a Certified Business Intermediary will ensure you are  working with an industry professional who has received the proper training to handle the complexities of sizeable business transactions. While it’s certainly not always an easy process to sell a business, a Business Brokers will help keep you on course.

5. Prepare for Negotiations and Closing

Once your business is prepared for sale, now is the time to get ready for negotiations and closing your sale. You’ll want to work with a Business Broker in order to help you determine what your company is worth and a Broker will be able to assist you with establishing the most accurate probable selling price.

This should get you well on your way to a successful business sale although you may also want to review the 7 mistakes to avoid when selling a business.