You Want to Sell, Now What? Preparing A Business for Sale

To get the best price when preparing a business to sell, think about selling a business from the perspective of a buyer. Buyers are concerned about adverse selection – are you selling the business because there is some risk they can’t see? Buyers that understand your business will close the deal quickly and pay a better price.

The question is, what do the buyers need to see to get comfortable with buying a business?

Your Reasons For Selling

The numbers will come later, but deals can and do fall apart all the time for personal reasons. Explain why you want to sell the business – retirement, desire to do something else, or otherwise. Every buyer will want to know the why before getting into the details.

Financial Record Keeping

This is straightforward but important. Three things:

Have clean financial data: You need at least a basic profit and loss statement for the last three years. The more information you can provide the better, and ideally in digital form.

Get help: It’s important to get this right, check with your accountant or auditor to make sure the records are correct.

Forecasts: The more certainty a forecast has, the more it has value. Provide as much information as you can.

Seller Team

Make sure you have legal representation for this process. A business sale will require legal contracting, and you want your own representation to make sure everyone is aligned on what the sale contract stipulates.

An accountant or a business broker is also helpful but not used in all sale cases.

Market Discreetly

Selling a business can impact the business in negative ways by unsettling employees or customers. While there’s nothing to fear, it’s better to keep it discrete until you know for sure the deal is going to close.

Move Quickly

Deal fatigue is a real issue. If you want to sell a business, speed generally helps. Most business sales have a deal timeline agreed to when the Letter of Intent is signed, and holding to those times can help close the deal.