Seller’s Tutorial

Steps to take after a decision to sell is made.

When positioning a business for sale many things need to be done in order to ensure that it will be sold within a reasonable time and for the best price and terms possible.

  1. Create a team and define what roles each will specifically play. This should include the seller, business broker/intermediary, accountant, attorney, and other advisors.
  2. Organize and gather financial statements that are complete and accurate. This should include income statements, balance sheets, cash flow statements and tax returns. The statements should cover the current plus the prior three to five years.
  3. Financial position of the business:
    1. Present business fairly
    2. Project future cash flow and profitability
    3. Restructure profit and loss and balance sheet
  4. List and detail or have the following availiable:
    1. Pending litigation
    2. Employment contracts
    3. Union contracts
    4. Employee pensions plans and profit sharing
    5. Exisitng contracts and their assignability
    6. Patents,trademarks and licenses
    7. Corporate records, corporate minute book
  5. Defining the sale:
    1. Asset or stock
    2. Price and terms
    3. Sale or lease of real estate available
    4. Employment of the principals and availability
    5. Closing dates or time restrictions seller has for selling
    6. Prepare the offering prospectus and marketing package
  6. Marketing package and plan should include:
    1. Product or service analysis
    2. Customer analysis
    3. Sales analysis
    4. Advertising analysis
    5. Management analysis
    6. Employee analysis
    7. Research and development analysis
    8. Market and competition analysis
    9. Facility analysis
    10. Lease analysis
    11. Material and equipment analysis
    12. Inventory and purchasing analysis

Business brokers/intermediaries are the primary vehicle for selling businesses. A greater percentage of businesses are sold and at a higher valuation through broker/intermediaries than by any other means. Also, confidentiality is better protected.

Contact Whitmore, Prokes & Micallef & Associates to discuss and answer your questions on your pending decision to sell or purchase.