How to Prepare Your Business for Saleby Ashley Wong | September 29, 2020
You have spent years building your business, and you have grown it into a strong, profitable operation. It is now time to prepare your business for sale. Whether your goal is to sell the company in a few years or in a few months, it is never too early to ensure your business is attractive to potential buyers to garner the best possible price. Take these steps now to prepare your business for sale:
1) Gather a team for the business for sale.
Perhaps the most important step a business owner can take to prepare a business for sale is to gather a strong team. A strong team will consist of both internal and external resources. Internal resources include any management and other key employees who will be instrumental in managing and completing the transaction. External resources include a CPA, a legal team, and a business broker or advisor with significant experience negotiating similar transactions. Each of these resources will play an important role in ensuring that the process goes smoothly, that your interests are protected, and risks mitigated as much as possible.
2) Perform due diligence.
Once you have assembled your team, work closely with them to gather the appropriate documentation. The process of investigating the business – including the state of its financials, operations, and governance – in anticipation of an acquisition is called “Due Diligence.” Due diligence can be a lengthy and challenging process but is critical to the successful closing of any deal. A prepared seller will be able to answer questions and provide information as the buyer requests it. Avoid transaction fatigue by anticipating questions and concerns that a potential buyer might have in advance. To do this, your team should conduct its own due diligence, viewing the information through the critical eyes of a potential buyer. This will allow you to fill any gaps in documentation or at least make a game plan for how to respond if a concern arises in due diligence with a buyer.
3) Calibrate expectations.
One of the largest causes of stress and fatigue when preparing your business for sale can be combating and re-calibrating unrealistic expectations. Many small business owners enter into a transaction with the mindset that it will be “standard,” “straightforward,” or “typical.” The truth is – there is no such thing as standard when it comes to buying or selling a business. For most small business owners, this is an event that will occur only once or twice in a lifetime and constitutes one of the largest financial transactions in which they will ever take part. Avoid unnecessary stress, shock, and transaction fatigue that can come when an unexpected issue arises by stepping into the transaction with the understanding that roadblocks and speedbumps are inevitable. Having a strong and prepared team at the helm will equip you to respond effectively to any issues that might arise.
You are not alone – Speak with an attorney to discuss your business transaction efforts, contracts, preparing due diligence, and more. Contact us at 425-250-0205 or email@example.com.
Legal Disclaimer: This article contains general information and should not be viewed as legal advice. You should talk with counsel familiar with your unique business needs before taking or refraining from any action.