Preparing Your Business for Sale

Selling a business is complicated, and calls for sound judgment. The stakes are high, and there is a risk of financial loss with likely the largest asset you have.

Therefore, it is good business practice to prepare your business for sale in advance. Even if you have no current intention to sell it, preparing your business for sale presents the opportunity to unlock the value of your business and create a more effective and efficient environment.

 

When preparing to sell (or evaluate) your company, remember the following:

  • Selling your business is risky, so start the preparations at least one year in advance. You have to tie up all loose ends, make proper inventory of assets before you sell.
  • Hire a Professional Advisor with strong financial and operational acumen from the start to assist you in maximizing the value of your business not just to negotiate a deal. In addition they will be able to help you in planning your exit strategy.
  • Review your financial and operational statements to chart growth. Make certain these records are up to date.
  • Gather an inventory of all the company assets.
  • Formalize records and document all business dealings for the ease of buyers. This will assist in the transition process after the business sale.
  • Secure all loose ends before handing over the company.
  • Take care of the contract details with suppliers and customers. This will eliminate problems for the new management.
  • Develop a proper manual of company rules and business guidelines. Don’t rely on the unwritten.
  • Assess leases and location. It’s critical that you have no surprises, as this could be a deal breaker that you have no control over.
  • Always sell real estate separately from other company assets. Comingling the assets could make it challenging to independently value the core business. In addition, you may not want to sell the real estate.
  • Upgrade and renew software and computer systems if they are old and antiquated. This should ensure a more favorable perception to the buyer.
  • Ensure that employees’ interests are taken care of. Try to retain the good employees during the merger process. If you have to cut down on the number of employees, ensure they still have goodwill for the company.
  • Consider a management succession plan. Buyers like to know that they can turn to someone in the transition of the business. Even offering to stay on for a period of time could assist in maximizing the value at sale.

By taking care of your employees’ interests, and looking out for the new management when selling the business, you will earn a lot of goodwill. By following the guidelines given above, you will be able to avoid the pitfalls of poor business deals and maximize your company’s value for optimal return.


 

About MKS&H:

McLean, Koehler, Sparks & Hammond (MKS&H) is a professional service firm with offices in Hunt Valley and Frederick. MKS&H helps owners and organizational leaders become more successful by putting complex financial data into truly meaningful context. But deeper than dollars and data, our focus is on developing an understanding of you, your culture and your business goals. This approach enables our clients to achieve their greatest potential.

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MKS&H

MKS&H

MKS&H is committed to providing personalized tax and accounting services while developing a deep understanding of you, your culture, and your business goals. Our full view of financial systems and the people behind them allow us create and evolve the best solution that will help you and your business thrive. The accounting experts and consulting professionals at MKS&H work together to help you achieve the financial results you want.

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