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Entries in Selling a Business (2)


Preparing to Sell Your Business - Tips from an M&A Attorney

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.


Selling Your Business? Here's a Checklist (Part 1).

In my M&A Law Practice, I work with clients who are selling a business all the time.  This can be an exciting and stressful time for business owners - and often times they become overwhelmed by the process.  In addition to the legal advice and services I provide, I always try to help them the other aspects of this process.  Below I have created a simple checklist of the things I usually share with business owners to help them wrap their mind around the process of selling a business.

Some Practical Considerations

  1. Make sure you think through the reasons you are selling a business.  This may sound obvious, but there are lots of implications to selling a business.  Are you tired of the business?  Do you want to retire?  Do you want to remain involved with the business, but just need/want the capital from the sale?  All of these sorts of things should be considered when working with your M&A attorney and other advisers in determining the terms of the sale of the business
  2. Is this a "family business" in which your children or other family members have an interest or expectation of long term involvement?  Sometimes people sell off a closely held business without considering the options of keeping the business in the family for future generations.  While this might not be a possibility or option for some, it is something I always recommend people give some thought to.  There are ways to step away from the a business, generate passive income, and still hand it over to family.
  3. Is finding the right buyer important to you?  A business owner who has spent years building a business might often be reluctant to sell the business for fear of a potential buyer not maintaining the business in the vision of its founder.  Some business owners don't care about this - but if you do - finding the right buyer for your business becomes very important.
  4. Determine what you want to get out of the sale of your business before you begin negotiating terms.  Don't let a buyer dictate the terms when you sell a business. Before you begin the process, put a great deal of thought into what you want or need to get out of the sale. Use that as the primary driver as you negotiate terms.  For people selling a business out of desperation, this might not help things all that much - but still - it is important to remember why you are selling your business as you work through the details.

Check back soon for  a checklist of some legal stuff you should add to your checklist when selling a business.