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What to Look for when Selling your Business

What to Look for when Selling your Business

It often intrigues me to know how many people write on something that they have no idea about and this article is no different. How many people write stories on a specific topic based on what they have read versus real world experiences. I can confidently and proudly state that I have been in the lion’s den and I know what selling a business is all about. The reason for writing this article is to allow me to share my knowledge and experience so that others can plan accordingly.

My background is in business and therefore my MBA, my age and my life has afforded me the tools with which to begin explaining to you, the potential business seller, what to be looking for when selling your business. The first and most important part of your plan would be to assemble, if you do not have one already, a team of objective professionals. The team would consist of an attorney, an accountant, and a real estate broker who can help you with the items that you need to know when making this life changing decision. Once you have the team in place, then comes the work of setting the stage for a potential sale. Creating a blind listing would be the most practical and safest way to proceed. What is a blind listing? Basically, you are selling a business entity and marketing it for sale without any specifics when it comes to the business owner, the business address or the business telephone/contact information. The blind listing is designed to give just enough information to the potential buyer to make him or her want to know about your business. Why do this? To ensure that you attract only serious potential buyers that do not try to bypass your professional team and also to eliminate your employees, your vendors, your lenders and so forth from knowing your intentions, if you deem this appropriate. The next step, you have a qualified, willing and able buyer. Ensure that the real estate broker obtains a confidentiality agreement signed by the potential buyer(s). Why? It would atrocious to bring in a competitor or potential competitor to begin looking at your profit-loss statement, your lending sources, your processes in creating your product, your marketing scheme, your key employees, and so forth without the proper documents to protect you.

The next phase is that of securing a healthy sale is to have your documents in order. What documents? You should be prepared to have:

(1) the past three years tax returns

(2) the past three years profit-loss statements

(3) the most current YTD profit-loss statement

(4) the past three years balance sheets

(5) the most current YTD balance sheet

(6) a list of assets to include furniture, fixtures and equipment

(7) a listing of your inventory

(8) at a minimum the YTD Payroll records

(9) a current list of employees, especially key employees/professional employees

(10) a current lease agreement

(11) corporation documents which will include: articles of incorporation, your Secretary of State (SoS) domestic stock certificate, your EIN paperwork, and your quarterly corporation meeting minutes

(12) current employment contracts

(13) current customer contracts

(14) bank statements

(15) equipment leases

Here is the catch, using a real estate professional, like Ralph Santos at Re/Max Traditions will ensure that you comply with this and more during the potential buyers due diligence phase. Yes, like in any transaction, this list is not all inclusive. It merely is a starting block in managing the whole selling process. Every business is unique as is every business sale. The potential buyer may opt to focus much of his or her time on tearing apart your financial statements or spend a great deal of time on your business systems and processes. Each of which may bring more questions and documentation requests on the part of the potential buyer. So basically, every sale is different and you need to be prepared to meet the potential buyers’ documentation requests, otherwise, you may lose the potential buyers’ interest and thereby an opportunity to sell your business.

So what is next? If and when the buyer and the seller come to an agreement, the professional team will come together to guide the seller on the forms to have signed or forms not to sign at all, to guide the seller in knowing what land mines may be out there that can bring a potential long term negative outcome. I cannot emphasize that having a strong team in place is paramount!

Why Use Ralph Santos at Re/Max Traditions?

Providing you with the resources, experience and honesty that will help you in negotiating your business needs.

Working with Ralph Santos at Re/Max Traditions you can be assured that the support and resources you receive as a valuable client is supported by over 100,000 sales associates worldwide! I have the knowledge and experience to help you create value in your business venture. My goal is simple, “to provide you with an honest, driven and resource based approach in meeting your business needs.”

Contact me today or call me at (888) Re/Max-11 (888.736.2911) to schedule a free in office or in your office consultation. Consultations are always FREE.

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Carrie Martinez

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2 thoughts on “What to Look for when Selling your Business”

  • Henry Tran

    March 9, 2016 at 1:52 am

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    March 15, 2016 at 2:15 pm

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