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Sell a business

How to Prepare Your Business for a Future Sale

Sell a Business 

Meet Sheila Seck, ​managing ​partner at Seck & Associates, a business law firm that helps entrepreneurs navigate change with a focus on ​mergers and ​acquisitions. The information you obtain from this site is not, nor is it intended to be, legal advice. You should consult an attorney for advice regarding your individual situation. ​Seck & Associates invites you to contact ​them and welcomes your calls, letters and e-mail, but merely contacting ​them does not create an attorney-client relationship. Please do not send any confidential information to them until such time as an attorney-client relationship has been established.

Whether you are looking to sell your business tomorrow or in two years, you can take action to prepare your business for a sale. Working now to make your business more appealing may mean a higher sale price in the future.

Key things that a potential seller will need to do to get a business ready for sale are:

  1. organize financial information
  2. get the right people in place
  3. identify and limit deal obstacles
  4. prepare for due diligence

Organize financial Information

One of the most important things to many buyers is your business’s potential to generate profits. Financials give buyers a glimpse of how a company is run from the volume of your sales to the cost of inventory and overhead. A buyer will want to see how you arrived at your sale or service price. Use your financials as a tool to show that your company is profitable, well-run and worth the asking price.

Get the Right People in Place

Having the right team behind you is monumental. You will need to build both an internal and external team in preparation for a sale.

Building your internal team means making yourself replaceable. You should guide and train key employees who can run the business and who will help transition the business to the new owner.

Your external team should be well equipped to handle the sale of your business. Consider a qualified attorney, a long-time CPA and perhaps an investment banker. All of the players need to understand your business’s goals and move in the same direction.

Identify and Limit Deal Obstacles

If the business has any skeletons, a potential buyer will find them. Planning to hide a potentially damaging piece of information is not only a bad idea but can expose you to future personal liability depending on the circumstances.

The better option is to eliminate existing or potential litigation, environmental concerns, tax issues, employee issues, title encumbrances or any other piece of information that a buyer might find disconcerting. Disclosing such issues to a buyer is key.

Once any issue is on your radar, actively try to mitigate or find solutions.

Prepare for Due Diligence

During due diligence, a potential buyer will ask for all of the information that will show the internal and external workings of your business. This will likely include tax clearance letters from every state you do business in, as well as, tax returns for the prior three years.  A buyer will also likely want lists of your employees, clients and vendors. They will also want to review key contracts. Be prepared to hand over all of your current contracts with both clients and third parties, union agreements, leases and titles.

Selling a business is stressful. Establishing best practices now can ease your burden in the future and may even help the business look more attractive to potential buyers.

Sheila Seck, Managing Partner at Seck & Associates, a business law firm that helps entrepreneurs navigate change with a focus on Mergers and Acquisitions. The information you obtain from this site is not, nor is it intended to be, legal advice. You should consult an attorney for advice regarding your individual situation. We invite you to contact us and welcome your calls, letters and e-mail, but merely contacting us does not create an attorney-client relationship. Please do not send any confidential information to us until such time as an attorney-client relationship has been established.

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