Preparing to Sell Your Business
While many business owners do not have an exit strategy when it comes to selling a business, it’s a good idea to begin preparing your business for sale from day one of ownership. Circumstances can change from day to day and your ability to decide to sell your company will directly correlate with how well you’ve prepared.
To start formulating your exit strategy, you’ll need to make sure you take a closer look at this important area of your business. This key area will not only affect the profits you earn when you decide to sell, but can also impact your day-to-day operations leading up to the sale.
Your Financial Records
Having orderly records is a must in order to not only prepare a business for a sale, but also to keep the purse strings tight and your business on solid ground during normal operational times.
Keeping your balance sheet up to date, writing off obsolete inventory and uncollectible receives help avoid a lot of last minute financial juggling to get a clean set of books.
Additionally, be sure to keep tabs on other financial, legal, and even insurance paperwork that will be necessary for due diligence. Tax returns and other government filings, licenses and the like should be completed, filed and kept current. Documentation showing ownership, copyrights, trademarks and other intellectual property rights or environmental cleanup responsibilities and the settling of any lawsuits and claims in an expeditious manner is key to running a financial sound and well managed business. Plus, during due diligence, buyer’s will want to review several items including:
- Last 3 years of profit and loss statements
- Last 3 years of balance sheets
- Last 3 years of tax returns
- Accounts Payables / Receivables Aging Report
- Bank statements
- Lease documents
- Vehicle list / titles to vehicles
- Lists – Vendor, Inventory, Equipment, and Customer
- Franchise or licensing agreements
- Employment contracts and non-compete agreements
- Union contract
A regular, thorough review of the company books and other corporate records ensures they are up-to-date and complete. Being prepared to answer questions regarding the financial history of the business, including the high and low points, will help a potential buyer see your business as one that has been closely looked after.
Business owners decide to sell their companies for various reasons ranging from retirement to the need to liquidate assets. Start preparing your business for sale by using solid business practices that help grow your business today. Utilizing sound principles and procedures make the sale of your business easier and quicker when you decide it is the right time.
Cress V. Diglio, Florida Business Broker
Cress V. Diglio is a Certified Business Intermediary (CBI), a Merger & Acquisition Master Intermediary (M&AMI) and the past chairman of the International Business Brokers Association (IBBA).
Whether you are looking to buy a business, sell your business or merge with another business, Florida Business Broker Cress V. Diglio has the experience to assist you in all facets of the transaction. Call Cress today for complete transaction support and expertise, 888-984-4208, or visit https://floridacertifiedbusinessbroker.com.