After grappling with the idea of selling your business, you are finally ready to take the first step and make a call to a local business broker. Before you make that call, are you and your business prepared to deal with the scrutiny of a buyer and their advisory team? Here are some preliminary steps that you may want to take prior to making that phone call. These steps also happen to represent some of the common issues that may arise during the sale of a business.
- Books and records. In addition to the last 3 to 5 years of business tax returns, you will also need to be able to provide accountant prepared financials for the last 3 to 5 years, as well as the current year. Your business broker will need these documents in order to put together a valuation. Later on in the process, lender and buyers need to be able to understand the revenues and expenses of the business. If you have accountant prepared financials, you will increase the likelihood that your business will pre-qualify for bank financing, and more importantly will increase the likelihood that your business will sell.
- Fixed asset list. You will need a detailed list of the furniture, fixtures, and equipment that will transfer to the buyer of your business, along with a replacement value for each item on this list. Include VIN / serial numbers for any item with a value of $5,000 or more. If you have assets that are broken, not in use, etc., get them repaired or get rid of them.
- Current inventory level. When was the last time you took a physical inventory? Do you have excess and/or dead inventory? If so, you may want to consider getting rid of this excess or dead inventory.
- Real estate. If you own the real estate, and plan on selling with the business, you may want to consider having a real estate appraisal done.
- Lease. Do you have copies of the original executed lease, as well as any and all amendments? Have you ever, or have you recently, reviewed these documents?
- Contracts. Although these aren’t usually provided until later on in the process, have your reviewed the contracts your business has with customers, vendors, suppliers, etc. Are the contracts assignable/transferable.
- Administrative. Do you have an employee handbook and/or a policies and procedures manual? How about job descriptions for each employee? How about a business and/or marketing plan?
- Information Technology (IT). Is your IT infrastructure up to date? Do you have adequate security policies in place? Is there room to add more computers, phones, etc.? Do you own or have a license for the required software (not pirated copies)?
Now that you have reviewed these, and other pertinent matters within your business, go ahead and make that call. If you happen to reside in the greater Tampa Bay area, we would appreciate the opportunity to answer your questions and get you started with the process. Feel free to give us a call at 813-260-3127 or take a look at our website (www.vrsouthshore.com) where you can find additional information pertaining to selling your business.
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