10 Essential Steps for Preparing a Business for Sale

The process of selling a business can be a daunting one.

From the money involved to the change in lifestyle that comes with a sale, there are a variety of unknowns, large stacks of paperwork and complicated process to navigate.

Fortunately, Sunbelt’s experienced experts can help you along the process, whether you’re preparing to retire or moving on to your next venture.

If you’re starting to weigh your options and considering a sale, there are a variety of elements you’ll want to consider as you move throughout the process, and a number of ways you’ll need to get ready.

Here are 10 of the most important steps you can take when preparing a business for sale:

1. Compile as Much Documentation as Possible

As you prepare for a sale, you’ll want to paint an accurate picture of your company through thorough and clear documentation. From valuations and tax returns to company processes and intellectual property, you’ll need to properly document all elements of your business. These documents should include all technology, tools and property of value. This will not only help shine a light on the positives of your operation, but will demonstrate how a new owner can keep operations up and running to ensure a smooth transition.

2. Assemble a Trusted Team of Advisors

Unless you’re a seasoned veteran of selling a business, you’ll want to assemble a trusted group to help guide you through the process. These experts should at least include a business broker, an attorney, a CPA and a financial advisor, each of whom will help you work through the challenging process of a sale. The right people will help you work through the legal and financial implications of a sale and planning for the future, whether that’s your next venture, a retirement or anything else.

3. Get an External Perspective on Your Company’s Value

No one knows your business quite like you do, but you’ll need to get an external perspective to determine its tangible value. A business broker can help you assess the true value of your business, including your assets, and project what a fair price will be on the open market. Doing this assessment ahead of time will ensure that you’re not surprised by offers, and that you can properly plan for what comes next. Sunbelt advisors can help you consider ways to enhance the value of your business to maximize an offer.

4. Maintain — or Boost — Your Sales Figures

Often, when preparing to sell a business, owners will take their foot off the gas and stop worrying about sales. This is a mistake. The best time to take a run at boosting your sales numbers is in the time leading up to a sale. Prospective buyers will be attracted to quarter-over-quarter growth, and revenue is one of the best ways to prove to a buyer that your business is worth acquiring and can bring them profits.

5. Pre-qualify Prospective Buyers When Possible

As you progress throughout the sales process, you’ll want to begin making an effort to pre-qualify those who express interest in buying your business. A pre-qualification sheet could include elements like income, business sector, location, size, investment capabilities and more, which will help you and your advisors determine whether a prospect is viable. This pre-qualification process will help minimize surprises toward the end of the sale.

6. Preserve Stability Among Your Leaders

Prospective buyers want to see continuity, and a quick way to alarm a potential buyer is by losing your leadership team as you try to sell the company. Leaders and their relationships, knowledge and history are critical to the success of any business, so maintaining continuity in leadership is a huge plus for a prospective buyer, who will aim to limit the fallout of new ownership. By maintaining an experienced, well-trained team that knows the ins and outs of your business, you can help keep it appealing.

7. Extend and Secure Existing Contracts

You’ll still be focused on the internal team and inner workings of your business during this process, but they aren’t the only things critical to your company’s success. Maintaining external contracts — from customers and vendors to inventory management or services — can go a long way toward demonstrating to a buyer that their purchase will come with a seamless transition among sales, supplies and service.

8. Be Extremely Thorough With Financial Documentation

Buyers will want to take an in-depth look at the profits and losses associated with your business. Before you get too far into the process, you’ll want to collect statements and any other relevant financial documents. You’ll want to have an itemized list of expenses, detailed payroll records, real estate expenses and equipment costs, from company vehicles to photocopiers. Your historical revenue figures and projections will further paint a picture for a prospective buyer.

9. Secure Your Intellectual Property

Whether your team is selling a product or a service, you’ll need to be absolutely certain that your intellectual property is secure before selling. A buyer will want to ensure that they can rely on using any patents, trade secrets or other intellectual property assets as they take over ownership and management of your business. You should also consider securing commitments from team members who lead product innovation efforts, which could help set up the next owner for success.

10. Maintain Your Sales Pipeline

As they review your books and operation, a prospective buyer will take a close look at your pipeline and the reliability of your revenue forecast. It’s crucial to shore up your sales team and process before you take your business to market, which will ensure that you can count on inbound profits for the foreseeable future. You’ll also want to demonstrate that you have a dedicated sales team in place, which will give comfort to a buyer who wants to ensure success moving forward.

If you’re ready to seek help in the sale of your business, reach out to us today to get started.

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