| Fundamentals of Selling A Business - Preparation | | | | selling process and prevent delays in closing the |
| Business owners invest much time and effort into | | | | sale. |
| their businesses, and most arrive at the hard | | | | Physical Condition of the Facility |
| decision to sell their businesses at some point in | | | | The condition of the business facility indicates how |
| time. There are various reasons for selling a | | | | you operate your business but more importantly, |
| business, and although each circumstance is | | | | it gives potential buyers a good impression of |
| unique, most owners have similar incentives and | | | | what they are buying into. You should do what is |
| concerns. It is an emotional and difficult process, | | | | necessary to make your business facility more |
| and the most advantageous deal is achieved by | | | | presentable such as repainting the interior and |
| understanding the steps and factors that | | | | exterior, reconfiguring the business to convey a |
| determine the best time to sell. | | | | productive and efficient working environment, |
| After the decision to sell has been made, there | | | | making minor repairs, or simply removing garbage |
| are a number of preparatory measures that | | | | from the storage and work area. |
| make your company more appealing to potential | | | | Business Records |
| buyers, and they may take from two to twelve | | | | You should organize your business records such |
| months to implement. | | | | as any articles of incorporation, tax records, |
| Financial Statements | | | | leases and contractual agreements, and payroll |
| You should obtain the most recent profit and loss | | | | records. You should gather documentation relating |
| statement from your accountant. It is preferable | | | | to patents, trademarks, copyrights, licensing or |
| to also get the past two to three year's | | | | franchise agreements, and bank loans. |
| statements to show a historical trend and profile. | | | | If your business requires a license or permit to |
| The profit and loss statement shows both parties | | | | operate, ensure that it is current and readily |
| the income earned and costs incurred in the | | | | transferable. You should get a hold of the |
| accounting period, the difference of which is the | | | | necessary paperwork that would help transfer |
| net profit. | | | | the license or permit to the new owner. |
| You should address how you can strengthen or | | | | Businesses are either located in a leased or owned |
| better document your company's financial health. | | | | facility. If it is leased, you should check that you |
| Many owners minimize taxable income by using | | | | have a copy of the lease for review. Potential |
| techniques to hide their earnings, however the | | | | buyers are concerned with the lease terms, |
| smart buyer will recognize such tactics. Buyers will | | | | especially with the number of years remaining on |
| normally recognize the company's observable | | | | the lease. It is optimal to have at least three |
| profits and will not pay for earnings that are not | | | | years remaining which can be transferred to the |
| clearly documented. Since businesses are bought | | | | new owner. You may want to negotiate with the |
| on a basis of multiples of earnings, the investment | | | | landlord for an extension or an option to renew, |
| of taxes paid for a year or two would be repaid | | | | and you should find out the conditions that must |
| in multiples of that amount in a sale. | | | | be met for a lease transfer, assignment, or |
| You can increase buyer confidence by having | | | | sublease. If the facility is owned, you should have |
| your statements audited which will accelerate the | | | | the property appraised. |