Selling Your Business: A Quick Checklist
If you’ve got to the stage where you want to sell your business and have started researching the process, you may know that several steps are required.
If you haven’t begun researching, don’t reach for the letter of intent template just yet. Consider the items in this checklist and read our article to sell your business quickly and easily.
Which Three Factors Should You Consider Before Selling Your Business?
The three critical factors you should consider before selling your business are:
- Work out and consider the value of your business. To work out the value of your business, seek the support of experts in business valuation.
- Create a statement outlining your motive for selling. Some reasons behind selling your business may include retirement or a lack of compatibility with your investors.
- Gather the correct documents that reflect the value. Some of the documents you will need to provide evidence of the accuracy of the asking price include a stock and shareholder list, business registration documents, IP (intellectual property) lease agreements, and financial statements
11 Steps to Sell Your Business: A Checklist
Let’s now go into more detail about the steps you should follow to sell your business without difficulty. Consider the checklist below to help you.
1. Select a professional team to begin the process of selling the business
You may require a few key experts to begin selling the business. Not only should you hire an accountant, but you should also get an attorney and business broker on your team to help you understand the legal aspects of selling the business and handling the sales process. Use a broker if you’re selling to someone outside the family or someone who isn’t an employee.
2. Organize and check the lease agreements, licenses, and contracts
Some of the factors you’ll need to review when organizing the lease agreements, licenses, and contracts include the following:
- Checking whether the business has multiple owners
- Reviewing whether the business is a corporation
- Looking at the termination rules established when you established the business
- Considering whether you’re selling the name of the business
3. Prepare the business documents related to business operations
You must prepare the business documents related to business operations, including a plan for your business, a marketing plan, and your supplier contracts. You must also prepare your tax and legal documents, including audits, lawsuits (if any), and business registration.
4. Prepare a business inventory list
By preparing a business inventory list, you and your buyer will understand the items that belong to the business. Some of the critical aspects you may include in the business inventory list include office equipment or furniture.
5. Outline and talk about supplier contracts
It’s important to talk about whether your buyer must honor your current supplier contracts. Discuss the end dates of the contracts and establish the supplier contracts requirements in the contract you’ve established with the buyer.
6. Ensure you prepare sufficiently for environmental audits
You’ll need to be prepared for an environmental audit, which an environmental auditor will complete. The auditor will check whether your business has environmental permits to proceed with business operations, even if the processes may affect the environment. You will need to inform the buyer whether the permits are up to date and whether the business has remediations.
7. Provide information about the business’s software
Discuss the security and IT systems with your buyer and mention your business’s passwords and credentials after you update the ownership. You should also create a list related to the software renewal dates, including the domain renewal date.
8. Ensure your buyer gets all licenses and permits
Licenses and permits are critical, and paying them is essential. Without these documents, officials can close your business before you sell it. Providing an in-depth list of licenses and permits is fundamental, so ensure you give the new buyer licenses such as the tax registration, reseller’s license, general license, and occupational licenses issued by the state.
9. Prepare two confidentiality agreements
The two main confidentiality agreements include an agreement before selling the business and after selling it. The agreement before the sale is ideal for protecting you and the company from potential misused financial details. The agreement after the sale is perfect for keeping information from the deal undisclosed and hidden from the public.
10. Create a sale agreement document after establishing the purchase price
After you’ve established the purchase price, you can create a sale agreement document that has three parts:
- Prepare the letter of intent, which is a document you can use to indicate a pending purchase
- Establish the indication of interest and ask the buyer to sign it before providing tax returns or receiving information on business assets
- Create the purchase agreement and request the buyer to sign it, which brings the sale to a close.
11. Ensure a broker witnesses the signature of documents
A broker and an attorney must witness the signature of all documents you prepare for your buyer. They can be present via videoconference, which is a method frequently used.
Selling Your Business: The Essential Points
Selling your business requires much attention to detail and care when preparing documents. Stick to the checklist in this article, and you’ll not miss any critical factors during the process. Don’t forget to ensure that a broker and attorney witness the signature process, and you’ll have no problems selling your business quickly and effortlessly.
Susan Noel is an experienced content writer. She is associated with many renowned business and law blogs as a guest author where she shares her valuable articles with the audience.
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