There may come a time when you are ready to sell your business. It may be because you want to retire, change the pace of your life, or simply move on to a new venture.
Selling your business can be a challenging process, from getting the right professionals to help you to setting the right selling price to vetting potential buyers. It is important to ask the right questions when selling your business . The critical first part of the process, however, is ensuring that you have all the documents you need to maximize the sale price of your business.
To successfully sell your business, the first step is ensuring that you have all the information needed to present your business in the best possible light and help minimize the risk in the eyes of potential buyers. You will need to get your business files organized, and don’t hesitate to seek the help of professionals including accountants in preparing your documentations.
Here are the typical documents you will need:
- Adjusted balance sheet that shows the numbers from the business’ last three years’ tax returns (financial statements are best certified)
- Year to date financial statements including profit & loss statement and balance sheet
- Last three years profit & loss statements
- Last three years discretionary earnings statements
- Last three years tax returns
- Copy of profit sharing plans (if applicable)
- Copy of franchise agreement (if applicable)
- Current list of major equipment and furniture, including value
- List of any existing liens
- Accounts receivable report
- List of all outstanding deposits and amounts
- Sales and marketing collaterals such as price lists, sales reports, operations manuals, etc.
- Organizational chart
- Employee list, including part time and full time, their salaries, benefits, length of employment and copies of any employment contracts
- Inventory information
- Copy of all business insurance policies
- Copy of real estate or building leases and contracts, including addendums
- Copies of patents and trademarks
- Copy of all equipment leases.
- Copy of any licenses, certifications or registrations required for the business.
- Current client lists (specific client names can be withheld until the end of the review period)
- Copy of customer contracts (if any)
- Lists of major suppliers and distributors
- Offering memorandum that contains a detailed description of the business, the tax returns, the statement of seller’s discretionary income and adjusted balance sheet you’ve already pulled together, and all contracts that will pertain to the future operation of the business
- Confidentiality agreement that prospective buyers need to sign before you provide them with any documents or information about your company.
- SWOT analysis (optional)
- Business improvement plans (optional)
It is best to consult with professionals, including lawyers and accountants, to help you prepare the documentation you need to help ensure that the sale of your business is successful.
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