For most business owners, selling a business happens once in your lifetime. You have worked hard to build the business from the ground up, and it’s been a central part of your life for years – perhaps even part of your identity. Before you sell, you need to prepare both the business and yourself. These four tips will help smooth the way in getting to a purchase and sale agreement.
Tip 1: Prepare for Due Diligence.
You want your business to be easy to buy, so look at your business from the potential buyer’s perspective using a due diligence checklist. This process will allow you to identify areas of the business that are not well documented or need to be shored up for a buyer. Make sure you have complete corporate documents, trademarks are protected, contracts are in place, employment practices are documented and financials are clean. Sometimes this process takes months – or even years!
Tip 2: Review Contracts
Review your existing business contacts to ensure they are current and fully executed. Also, evaluate which ones require consent for transfer to a buyer.
Tip 3: Be Emotionally Prepared
Prepare yourself emotionally for the transition of your “baby” to someone else. Recognize that it’s a business transaction and the buyer likely won’t run the business the same as you did. If you can be objective during the negotiations and transition, you’ll be better able to assist the buyer in taking the reins and operating the business successfully. You’ll also save yourself a lot of stress.
Tip 4: Assemble an Advisory Team
Your advisory team is essential to bringing a deal to the finish line in your favor. Your team should include your business attorney, accountant, business broker, and a banker. These professionals have been through the purchase and sale process many times and can help you save time and money – and even save the deal sometimes!
Equinox can help you to prepare for due diligence and structure a purchase and sale transaction that maximizes the benefit and minimizes the risk to you. To learn more about our M&A services, send us an email through our Contact Us page or call 425.250.0205.