Selling a firm is new ground for many business owners that is why hiring a Business Broker to navigate the steps is so important.. The procedure may be intimidating and stressful. You may use the steps below to help you create a checklist to simplify and clarify what you need to do to guarantee the successful sale of your firm.
Discuss with your attorney whether you are selling a company entity or just its assets. Buyers often seek assets since the obligations of the firm do not transfer. As a result, sellers must be mindful of any potential liabilities, particularly those that may not be discovered for some time (e.g. future lawsuits or government audits for past business practices).
Documents for Business
- If your company is a corporation, have your attorney or Business Broker draft a corporate resolution authorizing the sale of the company.
- Check that the transaction complies with any termination restrictions outlined in your Articles and Bylaws.
- If your company has numerous owners, be sure all of them have signed off on the transaction.
- Ensure that the transaction complies with any Articles of Organization and bylaws.
- Consider if you have personally guaranteed any of the business’s obligations with other parties (e.g., bank, vendor, etc.) and negotiate a release from them.
- If you are selling your company’s name, be sure you have legal documentation in place that provide the new owner the right to use the name.
Tax Returns Documents
- Prepare all essential government tax records, both state and federal.
- Prepare the tax documentation required for the transfer of company-owned automobiles.
- Fill out IRS Form 8594. (required by both the buyer and the seller). The purchase price must be allocated in the same way on the form.
Asset Transfers and Financial Documents
- Negotiating the Purchase Price: At the very least, ensure that everyone agrees on the following:
- The cost of prorated rent, utilities, and other charges;
- Determine the worth of any leftover inventory (if any);
- Set a price for all outstanding accounts payable and receivable, and/or create a contingency to cover these expenses.
- Check that all insurance documentation has been transferred or canceled.
- Determine what furniture and equipment will be sold and what will be removed from the property and retained or sold separately.
- Prepare loan documentation such as the following:
- Purchaser security agreements (including any guarantors),
- Your state will require you to submit a UCC financing statement (if required).
- Prepare succession plans for employee benefit schemes, profit sharing, flexible spending, and bonus plans.
Notifications from the Government
- Changes in LLC ownership/dissolution and/or corporate changes should be reported to the Secretary of State’s Office.
- If the company’s ownership changes, notify the IRS (not needed for asset transfers).
- If the company’s ownership changes, notify the Department of Revenue (not needed for asset transfers).
- Prepare lease transfer agreements for every property that is leased.
- Update the leasing company’s contact agent for corporations and limited liability companies.
Telecommunications; Internet and Website Administration
- Determine if the phone number will remain with the firm and if so, update the contact information with the phone company.
- Cancel or transfer any phone numbers that will no longer be used by the firm.
- If required, send out notifications for changes in contact information.
- Determine if the phone, utilities, Internet Service Provider, and other third-party contracts will be maintained; at the very least, provide them with contact information for the buyer.
- Appoint someone to manage the website.
- The updated domain name and website vendor ownership and contact details.
- Make any necessary revisions to services provided and mission statements.
Communicate with Employees
- Inform staff of your decision to stay on as a consultant or manager, as well as your new function.
- Notify employees of any changes in management.
- Employees who will lose their positions as a consequence of the sale should be given letters of reference.
- Make certain that any surviving staff are fully aware of any forthcoming policy or procedural changes, whether known or anticipated.
- If there is any pending work product that will be transferred to the new owners, ensure that customers are informed of any implications.
- Determine who will be held accountable for any financial losses caused by outstanding or back-ordered work.
- Request that your attorney writes a bill of sale that all parties sign.
- Request that your attorney writes closing paperwork that includes the following:
- Purchase cost,
- Price changes will be paid or credited to any party.
The final purchase price after all modifications and credits have been calculated.