Tip #83

Partners, Investors and Spouses must all be in agreement to sell the business.
There are many stories of partners, investors or spouses showing up right before closings or even at closings to express their opposition to the sale. Obviously, in those situations there are existing conflicts which have not been worked out between the parties. In the early stages of planning the exit of a business, the majority owner must make sure everyone agrees that they are willing to sell at an agreed upon price and terms and will be willing to sign the closing documents.

To get maximum value, a business has to project a strong future!

Everything is changing so fast these days, it can be hard for a company to keep up. Business owners have to pay attention and be open minded as to what it will take to continue to grow their company – particularly with new technologies coming on line so rapidly that can impact products, services and the marketplace. When it comes time to sell the business, buyers will look at not only the historical record, but if the business is positioned to grow and be profitable for years to come.

Buyers and lenders will want as much detail as possible to make a decision.

In order to sell their company, business owners must disclose certain basic information such as Financial Statements and Tax Returns. And sometimes buyers will request additional information which will require the business owner to spend much more time accumulating that data. But wait there’s more! After an offer is accepted, business owners must be prepared to go through the due diligence process sharing many more details with the buyer and any lenders for full disclosure and to verify the financials.

Financial statements are a company’s report card and the key to determining business value.

There are many items that buyers for a business will want to see, but the most critical are the Profit & Loss Statements, Balance Sheets and Tax Returns for 3 – 5 years. These documents must be current, accurate and readily available. Buyers, their accountants and advisors will closely scrutinize these “report cards” which will serve as a basis to determine cash flow and value. In preparing a business for sale, these documents need to be collected, reviewed for accuracy and ready to be presented.

Preparing a business for sale can be a challenge for many business owners.

Who really has time when they are trying to manage the business on a day-to-day basis? And sometimes painful decisions have to be made, such as reducing the workforce, updating technology or changing directions. Plus, it can cost money and/or advisors need to be brought in. But like working out and dieting, preparing a business for sale needs to be done to get the maximum benefits!