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Want to sell your business? This is how to prepare

Guest post by: Alan Brind

Article Overview: In our experience the majority of business owners are inadequately prepared when the time comes to sell their business and transfer ownership. But, the way to ensure that the business owner maximizes the value of their business and minimize the objections raised by a potential buyer is to have squeaky-clean financials.

Want to sell your business? This is how to prepare

In our experience the majority of business owners are inadequately prepared when the time comes tosell their business and transfer ownership.But, the way to ensure that the business owner maximizes the value of their business and minimize the objections raised by a potential buyer is to have squeaky-clean financials.

When a potential buyer becomes interested in your business, their first port of call is to examine your financials. This is an opportunity for you the business owner to create a favorable impression and set the tone for the buyer’s whole experience in dealing with you as the seller.

An astute buyer will often have a cadre of professional advisor’s, the most notable in the early stages of discussions with the seller, is his accountant. Any CPA worth his salt will scrutinize your financial statements, with particular attention being paid to the balance sheet.

Many business owners we encounter, pay scant attention to their balance sheet, let alone are aware of its importance at the time of the business sale. So, a few words about the balance sheet are appropriate. A balance sheet is snapshot in time of a businesses financial condition, usually at the close of an accounting period such as a month, quarter or year. A balance sheet comprises assets, liabilities, and owners or stockholders equity. Balance sheets, in conjunction with income statements, are the most important records in a businesses financial reporting system, and required by law in many countries. In addition, well-kept financials are essential in helping to determine the value of the business.

Another area that is particularly vexing for buyers is inventory. This is another balance sheet item and can be a stumbling block for the owner to sell his business, especially in a manufacturing business with large and diverse inventories of parts, especially if the inventory records are not accurate and kept up to date. Yes, conducting a regular inventory can be burdensome, tedious, and expensive, but will pay dividends during the due diligence phase to minimize the effort required and allay the concerns of the buyer, especially if it’s a corporation. It’s hard enough to navigate this area if the inventory is all accounted for and in good order, it is virtually impossible to reach an agreement with the buyer and his team if the reverse is true.

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Article Tags: business owner, business owners, objections, transfer ownership



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funding nightmare recovery and PPM - My company has just finished being raped by two firms in Atlanta 1 a networking group and the other a capitalization group that are supposed to help growing companies raise capital. We shelled out close to $50000 to these two groups and have been strung along for 6 months on "why this isn't completed"; "we need to do this or that" etc. and we are fed up. Out of it all the first firm at least has introduced us to Angels and VC's that are interested and very serious about investing in our company. However the 2nd firm (which we were sent to by the 1st firm) was supposed to actually handle the capitalization structure; offering and prepare the investment docs. As you've probably guessed we paid for this upfront and we still do not have a ppm. We have our own CFO now and have done all the prep work ourselves internally and I don't want to engage another company to prepare the docs unless they are recommended by another entrepreneur. Does any one know of a reputable group to prepare a ppm expediently and introduce our project to additional investors? We have everything ready.
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Get it down in writing - An entrepreneur friend of mine came to me asking for help yesterday. He had invented a new product (which I happen to think is very cool) and hired a graphic designer to prepare a logo for him and some marketing materials. Now that my friend is starting to get some interest from a few major companies, the graphic designer is asking for more money or he won't give up the exclusive rights to use the artwork - which means that he could, if he wanted to, sell the same artwork to competitors of my friend's business. Whenever you hire someone to perform a service or deliver a product make sure you get down in writing that you own whatever results from your working relationship. It cannot be resold or reused by anyone else without your written agreement.
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