SELLING A BUSINESS

Selling Your Business? Get Your Documents in Order

Prospective business buyers wont’ simply take you on your word. You need to have documents ready to support every claim you make during the sales process.
Advertisement

During the course of a business sale, sooner or later your prospective buyer will expect - or, put more accurately, the buyer will demand - to see "just the facts" about your business. Therefore, you will need to have all your documents completed and organized before the business ever hits the market.

The following checklist will help you assemble the documentation you need to be ready to share.

Step 1. Be aware of the documents you'll need to present during the sale process.

You may already have many of these documents complete and available, in which case you can check it off following chart’s document description. Otherwise, leave it unchecked and plan to work with professional sale team members (business broker, attorney, accountant and/or other intermediaries) so you'll be prepared when the documentation is needed.

Documents

  Non-Disclosure Confidentiality Agreement

  Personal Financial Statement Form for Buyer to Complete

  Offer-to-Purchase Agreement

  Note for Seller Financing

  Financial Statements for the Current and Past 2-3 Years

  Statement of Seller's Discretionary Earnings or Cash Flow

  Financial Ratios and Trends

  Accounts Payable and Accounts Receivables Aging Reports

  Inventory List with Value Detail

  List of Fixtures, Furnishings and Equipment with Value Detail

  Asset Depreciation Schedule from Tax Return

  Supplier and Distributor Contracts

  Client List and Major Client Contracts

  Staffing List with Hire Dates and Salaries; Employment Agreements

  Organization Chart

  Photos of Business

  List of Opportunities for Improvement with Revenue/Profit Projections for Each

  Business Formation Documents

  Corporate or Schedule C Tax Returns for Past 2-3 Years

  Building or Office Lease

  Equipment Leases and Maintenance Agreements

  Business Licenses, Certifications and Registrations

  Professional Certificates

  Insurance Policies

  Copies Proving Ownership of Patents, Trademarks and Other Intellectual Property

  Outstanding Loan Agreements

  Description of Liens

  Product/Service Descriptions and Price Lists

  Business Plan

  Marketing Plan and Samples of Marketing Materials

  Employment Policy Manual

  Business Procedures Manual

  Other Documents Unique to Your Business

Step 2. Assemble all documents so you're ready when the need arises - and it will!

The business description that you provide in early ads and communications will draw initial buyer interest, and your early personal assurances and explanations will inspire further interest. But it's highly unlikely that you'll receive any kind of interest commitment, let alone an offer or indication of purchase intention, until you turn over hard-copy versions explaining provable facts, figures, and financial statements for your business.

Begin immediately to assemble all the documentation you'll need over the time period in front of you.

In next week’s installment of “Selling Your Small Business” we’ll help choose the experts that will make up your sales team.   

Editor’s Note: This article is the seventh piece in a series taken from BizBuySell.com’s Guide to Selling Your Small Business. The guide is a comprehensive manual to help small business owners maximize their success when the day to sell arrives. Each Wednesday, Inc.com will publish a new section of the guide outlining BizBuySell.com’s best practices, from the initial planning stages of a sale all the way through negotiations and post-sale transition.

IMAGE: Flickr
Last updated: Apr 25, 2012

MIKE HANDELSMAN | BizBuySell.com

Mike Handelsman is group general manager for BizBuySell.com and BizQuest.com, the Internet's largest and most heavily trafficked business-for-sale marketplaces.




Register on Inc.com today to get full access to:
All articles  |  Magazine archives | Livestream events | Comments
EMAIL
PASSWORD
EMAIL
FIRST NAME
LAST NAME
EMAIL
PASSWORD

Or sign up using: