Starting a business seems like the hard part…until you realize that one day you will need to leave your business
Think back to the day you started your business. You made the commitment and started building
your company block by block, decision after decision. After much time has passed, you are arriving at the point when you face the decision to transition or sell your business…your life’s work.
Not only must you deal with the emotional consequences surrounding your transition, but you must also gather all the information necessary to educate prospective buyers about your business in a format that proves the value you are expecting.
Gathering and presenting the information accurately is essential to successfully sell a business and will require a dedicated focus over and above the day-to-day energy you put into running your business. A mergers and acquisitions adviser to small businesses (a business broker) is a valuable resource for facilitating a successful business sale.
Why do you need a business broker?
An experienced, professional advisor’s duty is to assist you in organizing the documents to properly describe the business, its history, past financial performance, cash flow, assets and legal commitments. In addition, the broker must present the owner’s view for the future of the business, as obtained through in-depth broker-owner interviews.
The business broker or M&A advisor then assembles all the information into a confidential marketing document to present to prospective (hopefully vetted) buyers to help determine whether they are interested in proceeding with the sales process. The marketing document is the first introduction of your business to the market and should be professional and representative of both you and your business.
Here’s a Pre-listing Checklist for Owners Selling a Business
You should begin by assembling the following information for your business broker/adviser: – See more at: http://www.sbmon.com/Articles/Article/812#sthash.G3N5jw3Z.dpuf
1. Three to five years of year-to-date profit-and-loss statement with comparison to same period last year and current balance sheet.
2. Three to five years of tax returns or Schedule C’s if unincorporated.
3. List of furniture, fixtures and equipment (FF&E) with estimated fair market value.
4. Estimated average dollar amount of inventory on hand at seller’s cost.
5. Copy of lease (if applicable).
6. Copy of franchise agreement (if applicable).
7. Certificate of Good Standing from Secretary of State.
8. Copy of any business and/or real estate appraisals available (if applicable).
Assembling the information, determining a realistic value, creating the marketing material, finding the buyers and working with you to negotiate the sale of the business are the broker’s responsibility. Do not circumvent the preparation process and lower the market value of your company. The marketing document has only one chance to make the right impression – don’t waste the opportunity with lack of detailed preparation.
If you would like a free PDF of the Pre-listing Checklist for Owners, email Lisa at lmason@MetroBusinessAdvisors.com. – See more at: http://www.sbmon.com/Articles/Article/812#sthash.G3N5jw3Z.dpuf