Ten tips for preparing a business for sale

The sale of a business is often a difficult task full of potential deal-breakers along the way.  It is important for sellers to have their business properly prepared for sale to avoid deal-braking issues and get the deal to the closing table.  Here are ten tips for business sellers:

1. Clean up your books.  Clean financial records are a must.  If a buyer and his advisors can't understand your profit and loss statement, balance sheet and general ledger and they don't match your tax returns and bank statements, it will bit a lot of stress on the buyer and they will likely reduce their offering price or walk from the deal.
2. Quickly respond to the buyer's due diligence list within 1 to 2 days after receiving it.  For questions, keep the answers to the point.  Don't write a book where a simple answer will suffice.  With items not on the bookshelf, prepare an explanation of how long it will take to produce the information and why the delay.  Finally, understand any delay you create in providing due diligence materials will delay the buyer in their completion of due diligence.
3. Give a buyer adequate time to conduct their due diligence -- at least 5 business days for a simple business in an industry which they have significant experience and no more than 15 business days for a more complex business or business which they lack experience.
4. Keep emotion out of all communications, i.e., emails, phone calls and meetings.  If you begin to lose patience, step away from the computer, call back or leave the meeting.  Wait until you regain composure before responding. 
5. Ensure confidentiality as long as possible.  If buyer communication with employees or key customers is required as part of due diligence, make sure it is at the end of the process and you are confident the buyer will follow through with the purchase.
6. Check the terms on your lease to make sure it is transferable.  Have your broker speak to the landlord to understand the landlord's requirements for a buyer up front to avoid the landlord stopping the sale during or after due diligence.
7. Be prepared to personally guarantee the lease if assigned.  Most landlords will force you to take back the business and the lease if the buyer fails.
8. Understand buyers may disappear for a short time due to personal issues, e.g., family emergencies, planned vacations, holidays, etc..  Don't panic.  Have your broker speak to the buyer's broker to find out why the buyer has stopped communication.  I've seen seller panic create panic from buyers resulting in price drops or the buyer walking from the deal.
9. Include all relevant parties in all communications, i.e., buyer's broker, seller's broker, etc. in all communication with buyer.
10. Cooperate with your broker in providing all documents including due diligence materials, contingency sign-offs, contract addendums, etc. in a timely manner.

For additional information regarding Florida business sales, acquisitions and valuations, please contact Eric J. Gall at info@buysellflbiz.com or 239.738.6227. Also, visit our Florida Business Exchange website at www.fbxbrokers.com and my personal website at www.buysellflbiz.com.