Tag Archives: accountants

Preparing Your Company for a Sale

Selling your company is much more complex than if you were to sell a house or a vehicle. There are many factors that need to be taken into consideration even before you list your company for sale. To ensure you receive your asking price and to make the transition of ownership as simple as possible, you need to make sure everything is in order prior to the sale.

  1. Hire the Right Team

One of the biggest mistakes business owners make when trying to sell their company is not hiring professionals to help with the transaction. With the support of experienced business brokers, appraisers, accountants, and other sales professionals, you’ll make the sales process as easy as possible. The support will also let you know if your business is appealing to prospective buyers and will help you understand your options.

  1. Find Out the True Business Worth

You need to have a realistic idea of what your business is worth from an outside perspective to ensure you’re asking the right price. By seeking validation from an outside broker, investor, or bank, you’ll discover your business’s marketing profits, financial situation, and strengths to determine an asking price. They work with your company’s data to compare it to the national average to find the best asking price.

  1. Get Your Books in Order

Potential buyers will want to take a look at your books for at least the past 3 years so make sure your financial information is correct. Often, a third-party will come in to evaluate your finances, audit procedures, and accounting practices, so you need to have a clean set of books. To get your books in order, it’s best to hire an outside accounting firm to make sure there aren’t any financial issues that will hurt the sale.

  1. Consult a Financial Advisor

Speak with a tax advisor to help prepare your financial future after you’ve sold your business. This will provide you with an understanding of your personal and corporate situation to allow you to recognize certain options to negotiate into the sale.

  1. Organize Your Legal Papers

Review any and all incorporation papers, permits, licensing agreements, leases, and customer and vendor contracts to ensure no legalities will come into play during the sale. Plus, the buyer is likely to want to take a look at the papers to make sure they are in order.

  1. Meet with Your Advisory Team

When selling your business, you need to have a strong level of attorneys and accountants in place to work with you during mergers and acquisitions. In addition, a business or investment broker will be helpful to represent you through the selling process to determine the best deal.

  1. Understand your Business’s Profitability

Your expenses must be in order and you must have proof with documentation to support business expenses. This is done to show that you haven’t used business funds for personal expenses or that you haven’t incurred any major expenses over the last 3 years that may reoccur, which may turn off a potential buyer.

Selling your company isn’t something you do on a whim. It may take years of planning and preparation prior to placing your business on the market. But, with the proper planning and advisory team, you’ll make the transition of ownership easier and more beneficial for you, the buyer, and your company.