Selling your business, whether it is a long-time family business or something your built up recently, can be both exciting and stressful. Lots of times my clients are overwhelmed by not just the emotions that come along with what is typically a life changing event, but also the amount of work (legal and otherwise) that goes into selling a business. Starting with the due diligence process, selling a business can be extremely time consuming.
If you have the luxury of knowing ahead of time that you are selling your business, there are some things you can do to make the process go smoother. I've included a few of those things below:
- Get Organized. Make sure you have all of your business documentation organized and easy to find. If you have an M&A Attorney, ask them to provide a standard due diligence checklist for selling a business. This will give you an idea of the types of documents a buyer will want to see. Typically this will include corporate documents (i.e. your minute book), contracts with 3rd parties, financial statements, debt instruments and financing agreements, title documents, permits...etc. Getting organized in advance will help you save time (and agony) once your deal negotiations (and the inevitable due diligence requests) start pouring in.
- Make Sure Your Corporate Documents are Up to Date. Check with your state to make sure any annual/ bi-annual filings for your business have been made. If your business is regulated and requires licensure, make sure those are up to date as well. Little snafu's like an expired license or expired authority to do business can really hold up the process of selling a business.
- Do a UCC Search. Have a UCC search conducted in your state. Make sure you recognize anything on there. Anything you don't recognize or anything that should have been removed - take steps to clean up.
- Have your books looked at. Depending on the type of business and the size of the deal, you may need to provide audited financial statements. Have you bookkeeper / accountant tidy up your books for the past 3 years so that if audited statements are required, you can get moving on them easier.
- Do Some Reading on What to Expect When you Sell a Business. (sort of is what you are doing now) Beyond what you are reading here, try to familiarize yourself with some of the typically major components of a business sale and the types of agreements that will be used to memorialize the sale. If you have an M&A Attorney, business broker or CPA - ask them for form documents that you can review (some light bedtime reading).
Taking any/all of these steps will make your life much easier when you finally get around to selling your business. As always, make sure to surround yourself with qualified professionals, including an M&A Attorney with experience selling businesses.