Q: What should I do before selling my business?
Mar 31 2010
Answered by: Ashley de Safrin Ask a question
It can be very hard to sell a business that has become a part of your life but preparation can make letting go easier once you have found the right buyer prepared to pay the right price.
When selling your business there are several stages that need to be completed in order to achieve a successful outcome. Typical steps include:
- valuing your business
- preparing your business for sale, including taking steps to increase its value
- taking early tax advice to highlight issues which might affect your deal later – vital if you want to minimise the tax burden
- identifying potential buyers
- marketing your business
- meeting and negotiating with potential buyers
- completing legal due diligence with the buyer
- finalising the sale agreement and transferring ownership
Once initial sale terms are agreed your buyer will review commercial aspects of your business - such as contracts, staff and key customers - to ensure the claims you have made about the business are accurate. This process is known as due diligence.
The due diligence process is likely to cover:
- the business' past and forecast financial performance accounts
- valuation of property and other assets
- legal and tax compliance
- any outstanding legal action against the business
- major customer contracts
- intellectual property protection
Something else that you will be responsible for when preparing your business for sale ensure that there are no major issues that could jeopardise the sale, such as legal action being taken against the company or a tax investigation, and make sure that any outstanding operational and staffing issues are dealt with.
For more specific information about your responsibilities and liabilities visit the Business Link web site.
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