- Conduct an Honest Self-Assessment. When selling, it's important to ensure you are accurately and fairly representing the business. Are there any issues that could delay the process or reduce the price? As part of their due diligence process, prospective buyers will ask questions about your company, review financial statements, evaluate employee matters, and otherwise learn everything they can about the business. It is helpful to understand potential concerns and address them as the transaction progresses. Having a fair and unbiased big picture view can help avoid hard feeling and delays.
- Enter into a Confidentiality Agreement. As a best practice to eliminate potential surprises and cause delays, Transworld recommends that a potential buyer and a potential seller agree to sign a confidentiality agreement. This agreement protects the seller from unfair competition if the purchaser does not follow through with the transaction. Without such a legally binding agreement, the prospective buyer could take all the knowledge it learns about the seller, refuse to close on the transaction, and unfairly compete with the seller.
- Provide All Necessary Financial Information. You can avoid delays by ensuring that all relevant business and financial information is up to date. As the seller, you will typically need to provide a potential buyer with current financial statements (i.e., balance sheet, profit and loss statements) going back at least three years. They must be complete and accurate and comply with generally accepted accounting principles. It is also useful to obtain a current business valuation based on your business' appropriate industry valuation methods.
- No Surprises. In an ideal world, all of the negotiating, rushing, and documenting takes place prior to closing. The last thing you want is for a surprise to come up at closing. Transworld will help to ensure that all of the loose ends have been tied up and that there are no last-minute surprises, preventing time consuming negotiations that may need to occur at the closing table. However, the closing is not the end of the process. Frequently, there are certificates that need to be filed, liens to be recorded, and tax clearance certificates to be obtained.
It's not unusual for buying or selling a business to feel like an intimidating task. Business owners are often fully focused on business operations and may not have addressed details to maximize the business value. On the other hand, a buyer may be interested in owning a business, but not know where to start. The process can be time-consuming and tedious for both the buyer and the seller. However, engaging the professionals at Transworld Business Advisors early on in the process can help to avoid unwanted delays, which will ultimately be of benefit to both the buyer and the seller. In business, time is always of the essence and it's no different when selling a company. Delays and surprises can wear everyone down and frustrate the parties involved, making them less willing to compromise and quickly leading the deal to fall apart. Transworld Business Advisors recommends you consider the following: