Five Important Things to Do Before You Put Your Business Up For Sale

1. Preparation of Financial Documents: Typically, a buyer and lending institutions will require three years of financial information, including profit and loss statements, balance sheets and tax returns. Also, a business broker or valuation company will need this information in order to determine how much your business is worth. It is very important to assess these documents for accuracy and completeness. Accountant reviewed or audited financial statements will make the due diligence process a lot easier and will increase the likelihood of the deal closing. If you have time, and don’t need to sell your business right away, start cleaning up your books to reflect an accurate picture of the business at least three years before putting the business on the market. Remember, besides being illegal, most buyers will not pay for cash that an owner does not report.

2. Organize your Company Books and Legal Paperwork: Review the Company books to make sure that all corporate records are up to date. If necessary, take any corrective measures necessary to become current. Have copies of all your permits, licensees, vendor contracts, leases and employee contracts available. A buyer will most certainly want to review these documents during the due diligence process.

3. Understand the Tax Consequences: Many tax planning strategies to save you money when you sell your business need to be in place several years before you sell your business. However, if you didn’t plan in advance, it is still important to speak with your accountant or a tax expert to understand the financial tax consequences of selling your business. How the deal is structured can have a significant impact on how much taxes you will owe.

4. Clean up the Business: There is an old saying, “Don’t judge a book by its cover.” However, many people do, and a business that shows poorly may turn off a potential buyer. A clean, orderly business shows a potential buyer that the business is well managed and the owner takes pride in the Company.

5. Put a Sales Team in Place: Selling a business takes special skills and knowledge. Using an experienced business broker can not only increase the likelihood of a finding a buyer, but history has indicated that you will get a higher selling price. Also, you will need to find an attorney and accountant experienced in business transactions. An attorney or accountant who does not specialize in business transactions can cost you money or even kill a deal that should have closed.


To learn more about selling a business, please visit my website at http://www.empiresandiego.com/