You had an idea for a business and followed through on it.
Now you have a thriving business.
Anyone that has started a business realizes there comes a time when you want to either retire from the business or sell it to someone that can take the business to the next level. Entering into negotiations with a potential buyer can be very stressful.
Here are 10 tips on how to keep organized when selling your business.
1. Financial Statements
This area will provide the most work and it is the most important area to have current. Any future buyer will want to understand the financial condition of the business that they are buying.
You will need to provide up to three years of financial statements. You may need to have an accountant certify the statements for you.
2. Customer Contracts
Companies will offer their biggest clients a discount for their repeat business. Sometimes you will have contracts for particular customers that dictate the pricing terms they are offered. You will need to provide copies of these contracts.
3. Business Licenses
Most businesses will require some form of business license. You will need to be able to provide your business license and show that it is current. Nobody will be interested in buying a business where the license has expired.
4. Marketing and Advertising
Most companies run marketing and advertising campaigns. Most of these campaigns are placed weeks or even months before they actually run. You will need to provide details of any future marketing and advertising campaigns that you have paid for or have committed to buying to the new buyer.
5. Legal Representation
You should always have a lawyer involved in the selling of a business. The lawyer will be responsible for reviewing the terms of the Purchase and Sales agreements.
They are able to point out any clause that is not favorable to you. They can also provide a confidentiality agreement that any potential buyer will need to sign before discussing financial information with them.
6. Future Work
If you have entered into any contract to do future work for a customer, the buyer will need to see these contracts. Since the work will be completed after the sale, they need to know the exact scope and payment that will be involved.
7. Bank Statements
Bank statements are required for financial due diligence performed by the buyer. You will need to be able to provide at least three months of recent statements. Most buyers will request up to 12 months of bank statements.
8. Pricing Structure
If you offer a tiered pricing structure in your business you will need to provide details of this to your buyer. They will need to know that they are charging the right price to any future customers.
9. Trademarks & Copyrights
If your business requires a trademark or copyright, then this will need to be transferred to the new owners. You will need to provide the terms of the trademark and the timeframe for which it remains valid.
10. Desired Outcome
Selling a business can be very stressful. You need to know what you want to get out of selling the business. Are you going to be involved in the business after the sale?
Are you going to start a new business? Are you going to retire? You will be more successful if you know what you want before you sell your business.