10 Step Checklist for Selling Your Business
1. Deciding to Sell
Decide that you are personally ready to sell your business.
Determine that now is the time from a market perspective.
Assess your financial security.
Consider tax ramifications and strategies.
Make sure you have a plan for post-sale.
2. Preparing the Business
Make sure documents, including financial statements and tax returns, books, records, contracts, and agreements, are accurate and complete.
Have processes and systems in place so that buyers can easily take over.
Update company technology.
Check that equipment, vehicles, and machines are in good working order.
3. Finding the Right Business Broker
Look for a reputable and relatable business broker.
Look for someone with industry knowledge.
Ask for assistance with preparing your business.
4. Getting an Accurate Valuation
Valuation can be certified or non-certified.
There are different methods for valuating a business.
5. Listing the Business
The broker will provide a listing/marketing agreement.
A marketing plan will be put in place and the search for a qualified, creditworthy buyer will begin.
6. Receiving Guidance from the Broker
Be prepared to answer questions about your business in detail.
Maintaining confidentiality will be addressed and adhered to throughout the process to the fullest extent possible.
Patience and thoroughness will be emphasized during search for qualified, credit- worthy buyers.
7. Negotiating: A Meeting of the Minds
Terms, clauses, seller financing, transition process, and seller role post sale will be negotiated.
Know what you are willing to accept, i.e., seller financing, terms, etc., but remember that flexibility is a key component for a successful sale.
8. Signing Letter of Intent (LOI) Provided by the Buyer
LOI can be binding or non-binding.
LOI needs to be reviewed by seller's attorney.
9. Exercising Buyer's Due Diligence
Be patient and prepared to answer additional questions from the buyer.
Both tangible and intangible assets (i.e., trademarks, patents, copyrights) will be reviewed.
Searches for liens, bankruptcy, and lawsuits will be performed.
Sales tax clearance in an asset sale will be required.
Third party consents and business relationship documentation will be required, along with other supporting documents.
Employee contracts and obligations will be assessed.
Minute book inspection in a stock sale will be requested.
Renegotiation will take place as needed.
At the end of due diligence, a purchase agreement will be signed.
10. The Closing
Attorney will inform as to what required documents to bring to closing.
All required documents are double-checked.
Compliance with statutes, licensing, etc. for both parties will be checked.
Business gets paid for, as per agreement.
Business is legally transferred.
This document is designed for general information only. The information presented in this document should not be construed to be formal legal or tax advice nor the formation of a lawyer/client.
For further information please contact me at www.kmckernanlaw.com kevin@kmckernan.com or 718-317-5007.