Selling a Business: How to Conduct Sell-Side Due Diligence

Selling a business is often a lengthy process, so it's best to prepare your middle market business for its sale up to three years before the actual transaction takes place. You might think that getting the best possible sale price depends upon timing the marketplace correctly, effective negotiation, and other externalities, but that isn't the case. The most important factor influencing the pre-sale valuation of your middle market company is your own due diligence.

It's inevitable that buyers will perform buy-side due diligence so they can understand and valuate what they're intending to purchase, but the seller should be doing the same thing. A thorough sell-side due-diligence process prior to the sale will give you a necessary, granular understanding of your middle market business, ensure that you have all required documents needed to support the sale, help you anticipate and react to buyer objections, and allow you to uncover and fix valuation-reducing problems. Here are six big questions that middle market sellers should be asking and answering when performing sell-side due diligence:

Is my business profitable, and can I show buyers that the profitability is sustainable? Make sure that you have solid financial systems in place to collect the relevant data, as buyers will want to scrutinize financial information for years prior to the sale. Every buyer will want to see a diversified and loyal customer base and competitive advantages in your product/service portfolio that are sustainable over time. You also need to show that your middle market business is mature enough to possess strong systems of control, especially in financial and sales areas.

Read more at:
Selling a Business: How to Conduct Sell-Side Due Diligence:

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.