Selling your business? This checklist will help.
Business owners retiring or selling their businesses engage a wide range of succession planning methods varying from simple, selling and walking away, to complex, where the owner is navigating a maze of sensitive family members through a gradual transition. And there are many variations in between, but if you’re leaning toward a business sale, use this checklist to prepare:
- Make sure your business plan is solid and current. Identify the challenges and opportunities of your company and explain how and why it’s ready for a sale. Address what distinguishes your business from the competition, and include a viable strategy that speaks to sustainable growth.
- Evaluate your leadership team. Your leaders should have the vision and know-how to keep the company moving forward without disruption during and after a sale. Make sure the team is well informed along the way and can lead your employees through the transition with little disruption. Make any necessary changes before you seek a buyer.
- Assess your technology and consider updates. Buyers will look much more favorably on a business with up-to-date, reliable and cost-effective IT systems. This may require an investment of time and money, but this strategy makes your company a “plug and play” proposition for a new owner.
- Know the value of your company. Obtaining a realistic, carefully calculated business valuation will lessen the likelihood that you’ll leave money on the table. A professional valuator can calculate a reasonable, marketable value estimate.
- Optimize balance sheet structure. Value can be added by removing non-operating assets that aren’t part of normal operations, minimizing inventory levels, and evaluating the condition of capital equipment and debt-financing levels.
- Minimize tax liability. Seek tax advice early in the sale process — before you make any major changes or investments. Consult your accountant regarding the new tax laws to make sure the new changes will not significantly affect your tax position.
- Do your paperwork and have it available. Gather and update all account statements and agreements such as contracts, leases, insurance policies, customer/supplier lists and tax filings. These documents are part of the due diligence process of any sale and you will need to produce them for the potential buyer to review.
Succession planning should play a part in every business owner’s long-term goals. Selling the business may be the simplest option, though there are many other ways to transition ownership. Our firm has helped many business owners through the transition. If we can help you, contact Dan Hout-Reilly, CPA, CVA, Ciuni & Panichi, Inc. Senior Manager, at 216-831-7171 or by email here.
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