Preparing a business to sell is a complex process that requires careful planning and execution. While the specific steps may vary depending on the nature and size of the business, here are ten essential things to do to prepare for the sale of your business, even if you have no plans to sell at this time:
- Financial Records:
- Clean up your finances: Make sure your financial statements are accurate and up to date, including profit and loss statements, balance sheets, and cash flow statements.
- Identify and correct any gaps or mis-postings: Investigate and resolve any financial issues or irregularities that may deter potential buyers.
- Get a professional assessment: Hire a certified business appraiser to determine the fair market value of your business. This will help you set a realistic price.
- Organizational Readiness:
- Streamline operations: Make sure your business is running efficiently and that processes are well documented and followed.
- Depending upon your industry you may need to ensure legal compliance: Address any legal issues, such as contracts, licenses to minimize potential liabilities.
- Customer and Supplier Contracts:
- Review and extend contracts: Ensure that contracts with customers and suppliers are valid and renew or renegotiate them if necessary to give stability to the buyer.
- Marketing and Branding:
- Improve your brand and market presence: Improve your branding and marketing materials to make your business more attractive to potential buyers.
- Make sure all your marketing materials, from your website to brochures to business cards have the same message and graphics.
- Due Diligence Documents:
- Collect due diligence materials: Compile all relevant documents for the buyer to review, such as customer lists, supplier agreements, employee contracts, and lease contracts.
- Exit Strategy and Transition Plan:
- Develop an exit strategy: Decide on the terms and conditions of the sale, such as whether it is an asset sale or a stock sale, as well as the desired timing. Your experts will assist you in this process (see Essential Number 8).
- Transition Planning: Help buyers understand how to manage post-sale business operations, including training, presentations to key stakeholders, and knowledge transfer.
- Seek Professional Advice:
- Hire experts: Use professionals such as business brokers, attorneys, and accountants with experience in selling businesses to guide you through the process.
- Maintain Confidentiality:
- Keep the sale secret: It’s essential to maintain confidentiality during the sales process to avoid disrupting business operations and employee morale.
- Improve Profitability:
- Increase profitability: Increase the profits of your business before selling, as this may increase the selling price.
Remember that preparing to sell a business can take a long time and it is essential to start well in advance. The more carefully and thoroughly prepared your business is, the more attractive it will be to potential buyers and the higher the likelihood of a successful sale at favorable prices and conditions.
I assist many of my clients with preparing to sell their businesses even if they currently have no plans to sell. A prepared business will be stronger, more profitable, and more valuable. A prepared business meets the ActionCOACH definition of a successful business:
A Commercial, Profitable Enterprise that Works Without the Owner.