The first impression of your business is what the potential buyer will see when they visit you. Take a look at your first impression. If it requires, painting, repairs, landscaping or upgrading, do these things before you begin the selling process.

Create a Management Data Book covering every bit of documentation you will need in connection with the sale of the business. First, create a history of the business that you can hand to a potential buyer. Then, begin inventorying assets determining whether you need to acquire additional assets or repair existing assets. Review and document all liabilities of your business. If you have loans, determine if those loans are assignable or will need to be paid as part of the sale and document the liabilities for a potential buyer.

Update all of your employee information for a potential buyer. Have information on their history, compensation, titles and job duties.

Review all of your contracts. These may include leases, customer contracts, patents, contracts or leases for machinery and office equipment. What do these contracts say? Are they transferable or must you receive the consent of the other party in order to assign them to a potential buyer? This is one of the most controversial areas you will encounter in order to complete the sale, and it is especially important in an asset sale which most buyers prefer.

Review all of your financial statements, and if you do not have clean financial statements, have them reviewed by your accountant or an outside accountant to place them in a form in which they are readable, presentable and answer the questions which will be on the buyer’s mind.

Review your customer list. You do not want to give that list to a potential buyer until they have signed a Confidentiality Agreement, but at some point the buyer is going to want to see who your largest and best customers are and how secure your relationship is with those customers.

Are you involved in any lawsuits, workers compensation claims or tax controversies? If you are involved, be prepared to explain them to the buyer. If you can resolve any of these matters prior to putting your business up for sale, it would be in your best interest.

Finally, review and update your corporate records. Do you have up-to-date minutes, copies of the Code of Regulations, Articles of Incorporation and election of officers which can be given to a buyer at the time they do their due diligence?

All of this takes time, but should be done before you meet that first buyer so you can maximize selling potential. If you are contemplating the sale of your business, prepare your business for sale just as you would prepare your house for sale.

This is the first blog in a series of eight on the selling process. For more information on S&K Transitional Services, please visit www.sktransitional.com

Getting Prepared   Am I ready to sell? The answer to this question is the “tipping point” to continue the process. Once the decision to do so is made: now come the steps necessary to get your house in order.

Initial Consultation   Now it is time for a reality check. You know your business and have a proven track record of successes. But, you are about to start a process to which you are emotionally attached, without experience, and it is very possible you are relying on advisors who are still vested in you remaining in control. Find an experienced firm in these matters and ask for a meeting, at no cost, to explain the process from beginning to end.

Analysis   The truth of the matter is, value is in the eye of the beholder. Determining the value of your business is an art form based upon a number of quantitative parameters, including, finding the beholder. 

In Play    Communication with buyers is either done by some form of a bid process or a preemptive right to a single buyer. Either choice has its own advantages and disadvantages.

LOI Negotiations   This is the critical point of the process. Although the Letter of Intent in most cases, is mostly non-binding and may only be a few pages, it sets the framework for the final laps.

Buyer’s Due Diligence   In essence, this can be summed up as “trust but verify”.

Negotiations-Round Two   It is rare that the buyer’s due diligence process does not disclose some issues that were either unknown by the seller, overlooked or occurred subsequent to the LOI.

Closing and Post-Closing Adjustments.   “It ain’t over till its over”. It is sill possible that issues can develop at the last minute and it is common to have post closing pricing adjustments that need to be finalized.

This blog  is the first in a series. Subsequent blogs will address each step in more detail in order to assist you from start to finish in the process of selling your privately owned business. For more information on S&K Transitional Services, please visit www.sktransitional.com