Preparing to Sell Your Business- Part 1

Are You Ready to Sell Your Business?

Make sure you are ready, both financially and emotionally. Think about what life will be like after the sale. What will you do with your time? Will you have the financial resources necessary for your next stage of life? What net proceeds amount will you work for you after giving consideration to all of the costs of selling your business? Will that amount be sufficient to allow you to accomplish your business sale objective? Engaging a tax professional to help you with the analysis is extremely valuable.

Understanding Your Value Proposition

Many elements of a business make it attractive and build value in the eyes of the buyer. For example, does it have a solid history of profitability, a large, diversified, and loyal base of customers, a competitive advantage (product or service superiority), barriers to entry (intellectual property rights, long-term contracts with clients, exclusive distributorships), opportunities for growth, a desirable location and a skilled work force? Have you built a team capable of success once you've left the business? Will the business run successfully without you present?

Preparing Your Business for Sale

Get your books in order. You will need the following before you go to market:

 Last three years’ profit-and-loss statements.
 Year-to-date profit-and-loss statement.
 Current balance sheet.
 Last three years’ full tax returns.
 List of furniture, fixtures and equipment.
 List of inventories.
 Copy of your lease agreement (or appraisal if selling real estate).
 Backlog (if manufacturer), contracts of future business, etc.


Be ready to furnish other documentation during the due diligence phase when you will probably be asked to produce insurance policies, employment agreements, customer and vendor contracts, lists of patents issued, equipment leases and bank statements.
You will also want to clean up your business to make it attractive to buyers. Make any needed improvements to the premises, get rid of outdated inventory and make sure that equipment is in good working order.

For additional information contact Ron Schwab at 530 269-1143 or visit http://www.ronschwab.com/ .