Preparing for A Business Sale -- Key Areas To Consider

Clean Up Your Financial Statements

Reporting consistency, accuracy, and identifying/planning for allowable “add-backs” during the cash flow re-casting process is a critical component to deriving the highest return.

Free Your Working Capital

Liquidity health and managing frozen capital in inventory and receivables should be top priority. Assessing the value of equipment and other assets that will be central in the transfer as well as conducting an independent inventory and equipment appraisal before the sale can remove a lot of negotiation hassle.

Build A Capable Management Team

Maintaining and building a successful, results-oriented team and healthy culture will add significant value at the closing table. Invest in training and succession planning and make sure the business can be well managed without your day-to-day involvement.

Review Corporate Housekeeping

If needed, updating corporate structure, policy guidelines, employee handbooks, organization chart, and other regulatory and/or legal issues for compliance and good working order can avoid delays in due diligence.

Don't Wait For Tax Planning

Setting up for the management of tax liability associated with the sale will ensure you receive your expected proceeds goal at closing. It is wise to consult with deal structuring professionals and have a point of view for the allocation of the purchase price prior to listing the business and entering negotiations.

"Spruce Up" The Facility

Ensure proper maintenance, condition and appearance issues, and environmental compliance are in order for your real estate. An independent real estate appraisal before the sale can provide sellers with a better idea of value and remove a lot of negotiation back and forth.

Think Through the Transition & Handover Process

Managing the speed and nature of the exit, determining the degree of seller involvement in the new ownership transition, and having a point of view on seller financing is recommended. Any sale will also require the signing of a Non-Compete Agreement.

Assemble Your Deal Team

Assembling the right professionals to achieve your exit goals (legal, tax, wealth, and business broker) will provide you the best probability of achieving your proceed goals.

Get Ready For Your Next Challenge or Past Time

Moving from the fast-paced world of business ownership is often times not an easy task. Before deciding to sell, have a plan for how you will spend your time post-ownership. Selling a business is always financial, often emotional, and can be stressful ... your trusted advisor can help you keep your focus on the business and your family during the selling process.

Hal Feder -- Certified M&A Professional -- June 2022