When selling your business, your first order of business is to develop an exit strategy in advance of the sale that includes long term planning to cover unforeseen contingencies and any post-sale advisory requirements.
A broker can help with this, as well as with prequalifying the buyer to make sure they have the financial assets to complete the purchase. This due diligence also protects you from competitors who want information but are not serious about buying your business, protects your vendors who are going to stay tied to the operation, and helps determine how well a buyer fits your company.
A qualified evaluation will include inventories, assets, sales and receivables, short and long-term debt, detailed records to determine overall financial health, tax returns, and financial statements for at least three years, staff and payroll details, industry trends, location, and market demand. You can partner with Lesdon & Associates to learn how to best promote your business and find guidance through this complex and often emotional process.
Lesdon & Associates can also help you take a hard look at important considerations, such as how well diversified your customer base is, the need for transparency that includes separation of personal from business, and risk versus growth opportunities.
Then, you will want to get your resources in place to help optimize the purchase process and protect you from unforeseen consequences. A CPA will make sure the accounting is transparent, a Lawyer will handle all legalities, and a Finance expert will help you sort through the many finance options.
Once you come to an agreement, you will want to get all documentation in order and close the deal with a comprehensive Asset Purchase Agreement. These can be up to fifty pages in length and should include, among other things a non-compete, employee agreements, assets, lease agreement, and guidelines for the use of those assets.
Along the way, don’t forget about a “Business Owner Bio,” using a prospectus to network your business, and making sure the sale is structured so you realize the maximum profit when the deal closes, not afterward.