| If you are thinking of selling your business, one of | | | | part of the purchase price. If you have |
| your first questions to answer is more than likely; | | | | collectables such as paintings, antique cars or |
| where do I start? | | | | items that are personal to you and not needed to |
| One of your first starting points is to be clear | | | | make the cash flow of the business, remove |
| exactly what is being sold. This may seem | | | | these now. |
| obvious but many Sellers think they will deal with | | | | If the business has inventory, make sure the |
| it when they get an offer. So let's break this | | | | inventory is fresh and as useable as possible. If a |
| down and look a little more closely at it. | | | | buyer sees a lot of old inventory with doubtful |
| The two most important things to a buyer when | | | | value, it will become a specific negotiating point in |
| looking to acquire a business, is current cash flow | | | | the transaction and may kill the deal. If time is on |
| and the potential of the business. From the | | | | your side, start selling the inventory to your |
| buyer's perspective, the cash flow is the fuel that | | | | customers even if it needs to be at a reduced |
| feeds the business to pay the suppliers, | | | | price. You are likely to get more from your |
| employees, landlord, tax man, lenders and of | | | | customers than being forced to sell it as a |
| course, leave something left over for them after | | | | discount as part of the purchase price to the |
| all their work and capital investment in the | | | | buyer. |
| business. | | | | The next thing to do is make a list of all the |
| For the buyer to achieve the above, they need | | | | Fixtures, Furniture and Equipment. Hopefully this list |
| to purchase all the assets of the business so they | | | | is already in place as your accountant would be |
| understand what each asset does and how it | | | | using this list as the depreciation schedule for your |
| contributes to the cash flow and/or potential of | | | | tax return. If the list doesn't exist, now's the time |
| the business. As the seller of the business, it's | | | | to build it as when you close escrow upon selling |
| therefore important that you make it clear what | | | | the business this list will be required. If the list is |
| those assets are and present them in the best | | | | old, now is a good time to update it by making |
| possible light. | | | | sure you still have everything and it is in good |
| So if you are thinking of selling your business, | | | | working order and condition. If it can no longer be |
| your immediate response to this question may | | | | found, remove it from your list and talk to your |
| have been "I am selling the business as a going | | | | accountant about writing it off for tax purposes. |
| concern on an 'as is' basis." This is perfectly fair. | | | | If it's still on the list but it no longer works, sell it |
| But you need to do a little better than that. And | | | | or get rid of it to make the presentation of the |
| I'll explain why at the end. | | | | business better and allow the items that are |
| So we are agreed the business is being sold. | | | | working and in good order stand out to the buyer. |
| When you have your first buyer meeting at the | | | | If your business has Works In Progress, make |
| business, the buyer will be absorbed in processing | | | | sure you can easily arrive at a value for those |
| what they can see and assume they will buy with | | | | items. It will become a negotiating point in the |
| their purchase of your business. The first thing to | | | | transaction. |
| do is therefore remove any items that are not | | | | |