Eight Things To Do Before Selling Your Business - Part 1 of 2
When selling your business, it pays to plan ahead. Don’t forget these important – but sometimes overlooked – strategies for maximizing value and deal certainty.
- Clean up! I learned a great lesson from a great chef: “You consume 70% with your eyes”. Just like the artfully plated dishes that would emerge from his kitchen, the appearance of your premises says a lot about your outlook, attention to detail and dedication. It’s easy to let things slip when you’re focused on day-to-day emergencies, but invest the time to inspect and refresh your offices and other premises. Dump the dog-eared National Geographics from the reception area, purge the dusty promo materials from the corner of the conference room, replace burnt light bulbs and – let’s face it – a fresh coat of paint probably wouldn’t kill you. Prospective purchasers will notice.
- Organize for Due Diligence – Most prospective buyers will dig deeper than the proverbial kicking of the tires. In fact, most buyers will deploy a team of eager lawyers and accountants to pour over a mountain your company’s key business, legal and financial records. Organize this information early, and spend the time to update your corporate minute books, government filings and other records. Buyers and sellers often want to move fast, but a messy and disorganized due diligence process can drag out the timeline, frustrate the parties and lower a buyer’s confidence.
- Resolve Lingering Legal Issues – To the extent that you can do so on reasonable terms, now’s a good time to resolve any lingering legal issues, such as shareholder disputes, employee grievances and tax claims. These matters will certainly come to light during the due diligence process, and the conversation with prospective buyers will go much more smoothly if you’ve managed these issues in a diligent and reasonable manner.
- Align Key Shareholders – It’s critical to take stock of the company’s other shareholders and determine the likely degree of alignment or dissent before any potential buyer is at the table. Consider whether you need to shore-up other key shareholders in support of your exit plan. Presenting a united and like-minded shareholder-base is attractive to buyers.
Stay tuned for my next post and we’ll look at a few more things you can do before selling your business.
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