Preparing Your Business for Sale

Preparing Your Business for Sale

“By failing to prepare, you are preparing to fail.” Benjamin Franklin

Preparing you business for sale is as important as the sales process itself.   Focusing on several key items will accelerate the process.

This is a topic we are going to cover a few times, so this blog post is going to be a bit more tactical in terms of information.  When we sit down with an entrepreneur for the first time, apart from asking them about their objectives, their market, their competitors, etc. we also ask for a few key pieces of data.

Here is what we typically start with.  If you don’t have all of this – that’s ok, we can figure out whether its important and what else we can provide a buyer to give them the information they need.

  1. Financial Reports – last 3 full years of reviewed financial statements. These are your accounting statements that are prepared by a 3rd party accountant.  They don’t need to be audited, but they need to at least have been prepared by an outside reputable CPA firm. These will typically be in .pdf format.
  2. Year to date financials – these are your monthly financials – usually just your income statement and balance sheet reports from your accounting software.
  3. Major Asset and Equipment Listing – if your company relies on equipment in some way, this forms the basis of the minimal price you would be willing to accept for your business. A detailed description of each major piece including its make, model, year, hours, your best estimate of fair market value and anything else that you think is relevant to know about that piece of equipment.  On the equipment listing, this is also where we want to understand what other equipment you may not want included – often these are things like boats, RVs, snow mobiles, motorcycles, planes, etc.  If we know about them early, we can suggest some things that you can do before they become a problem later.
  4. The last 3 years (plus year to date) breakdown of your key customers by revenue amount. This isn’t something that we typically share to third parties right off the bat, but we want to understand how much client concentration a business has and what, if any recurring revenue there is.

With this data, we can start to evaluate the health of your business, suggest some initial changes that will enhance value and give you a realistic assessment of potential value.