The decision to sell your business is usually one of the most important decisions you will ever make. So it helps to prepare properly for this with the right checklist to sell your business. With over 18 years of experience in selling companies, we’ll provide a checklist of 10 items to consider when selling your business.
Checklist for selling your company
1. Make the right decision
Before entering the process of selling your company, the first thing on a business sale checklist is to decide whether or not to sell your company. Many factors go into this decision. In some cases, there is a compelling reason to sell, such as health issues, or you just don’t like the work anymore. Or perhaps you want to spend more time with family and friends. In other cases, the decision is much more complex. Some things to consider are:
- Are you financially prepared to sell your company?
- Are you emotionally ready to sell?
- Do you have a buyer in mind, such as your children or employees?
- What will you do after your sell your business?
- Do you have an idea of the value of your business?
After you carefully consider all of the relevant factors and you feel that it is time to explore the possibility of selling your company, you can move on to other items in the business for sale checklist.
2. Talk to Business Brokers & M&A Advisors
You can do some research in selecting the right business brokers or M&A Advisors that you want to talk to. Look for business brokers that not only have good reviews but also have experience selling your type of business. Once you have narrowed that down, you can call them and make sure that you are comfortable with them. Find out about their process and get an opinion on what they think your business would sell for. This will help you to determine whether or not you want to move forward.
3. Gather your financial information
A good business broker can give you a ballpark on what your business will sell for, but to give you a more accurate assessment, they will need to review your financial information. You’ll need to provide the last three years of tax returns and/or profit and loss statements, as well as a current year-to-date profit and loss statement. And they’ll want to know what your perks and benefits are in addition to the bottom line and your salary.
4. Identify Strengths & Weaknesses of your business
As part of the sale process, you’ll also need to provide information on what makes your business unique, including:
- How do you compare to your competitors?
- What types of customers do you have?
- Skills and responsibilities of your employees.
- The challenges that you have.
- How can a new owner improve on what you have done?
- Does any customer make up a large percentage of your revenue?
- Contracts and written commitments of your business.
5. Protect the Confidentiality of a Business Sale
Experienced Business Brokers will protect the confidentiality of your business’s sale by marketing it in ways that don’t reveal the identity of your business until after a potential buyer has signed a confidentiality agreement and provided information on their qualifications.
6. Speak to Potential Buyers
You want to speak with the best candidates to buy your business. You should establish a collaborative effort with your business broker to provide them with some guidance on what is important to you in a potential buyer, and a business broker can assist you in introducing the best potential buyers first.
Of course, there is a give and take with any business sale process, but you want to get as many things as possible, such as agreement on price and terms, buyer qualifications, financial capability, good chemistry, vision for the future business, and someone that will take care of your employees and customers. When you identify the things that are most important, then you can work towards negotiating an offer that is workable for you and the right buyer.
7. Accountant for Due Diligence
After you accept an offer from a buyer, you will need to provide more detailed information on your business so that the buyer can confirm that things checkout correctly with the business before they purchase it. Most business sellers have an accountant that assists them in this process. If you don’t have one, a business broker can recommend one for you. Your accountant will typically communicate with the buyer’s accountant to have a smooth flow of information and get their questions answered efficiently.
8. Get the right lawyer
Almost everyone knows a lawyer. However, you want to make sure that you have a lawyer who has experience handling the sale of a business. There are many different aspects to law, and just because a lawyer is strong in one area doesn’t necessarily mean that he has experience in handling the sale of a business. We have seen cases where people use a lawyer that is a friend or family member, and if they don’t have the right experience, they may be totally off base when it comes to the details of a business sale.
Once you have the right lawyer, you will work with them to negotiate the purchase and sale agreement. This will be based on the terms of the offer letter that were negotiated but will have more details, including the transaction’s legal aspects. Both the buyer’s and seller’s attorneys will have their own checklists for the business sale transaction, and any differences of opinions will need to be worked out. A business broker can help to keep the deal moving forward when the attorney’s hit any roadblocks.
9. Close the deal
Attorney’s are paid to be careful. It’s important to remember why you wanted to sell the business. As we counsel both buyers and sellers, there is nothing in life that is totally risk-free. At the end of the day, you need to decide what is most important to you. You don’t want to let small details get in the way of what is overall the right decision to achieve your goals.
10. Prepare the buyer for success
During the business sale process, you’ll want to have a good relationship with the buyer so that you easily share information on what they will need to do to be successful in the business. Both before the sale and after the sale, you’ll want to provide them with the nuances of the companies product and services as well as employees, customers, suppliers, and any other factors that are important in continuing with the ongoing success of the business now that you are no longer the owner.
If you have questions about how this checklist can be used to sell a business please reach out to us. Synergy Business Brokers has been helping business owners with the sale of their companies since 2002. We specialize in selling companies in construction, manufacturing, technology, distribution, services, and healthcare. If you own a profitable company in one of these sectors, please contact us at (888) 750-5950 or fill out a brief contact form.