How do I prepare to sell my business?

15 Jun, 2020

On Behalf of Mack & Mack Attorneys | business law

Like many business owners, you may have decided to sell your business and move on to another endeavor or to enjoy a comfortable retirement. At this early stage, you should consider how to attract a buyer for your business. Entrepreneurs tend to scrutinize a business before buying it, and you should be ready to address their concerns.

Buyers may have various questions about your business. They will also likely want to see specific documents. If you prepare correctly, you may answer questions your buyer has and represent your business well as a sound investment. Forbes provides a few tips that you may benefit from as you seek to sell your company.

Conduct a third party evaluation

You might have a good idea of how valuable your business is, but a professional evaluation of your company may be more likely to persuade a buyer of the value of your operation. Consider having a business valuation specialist valuate your business. A valuation specialist can examine all of your assets and liabilities, using them to come up with a report that defines your business value.

Address problems with your business

Put yourself in the head of a potential buyer. Think of anything about your business that might cause a buyer to have doubts about the value of your business. Perhaps your place of business has frayed or cracked walls, or you have an expired license or a lapsed vendor contract.

Before you go looking for a buyer, take the time to address problems with your business. Make sure your contracts and licenses are up to date. You may need to conduct some building repairs or renovation. Check to see that your operational documents are accessible and complete.

Prepare your business records

Look over your business finances. Expect that a buyer will want to evaluate your business records to ensure that your business is not an unacceptable risk. These documents generally include the following:

  • Profit and loss statements
  • Net profit statements
  • Monthly bank statements going back several years
  • Balance sheets
  • Business tax returns for the past three years

Practicing complete financial transparency may not only convince your buyer to purchase your business, but it can keep the purchase going without significant delays. A buyer and the agents associated with the buyer will likely want time to review your records and may not appreciate waiting for you to get them ready.

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