Anticipate what a qualified buyer will want to see and will need to VERIFY, in order to make you an informed offer.
Objective
Assemble and organize the records and content needed to successfully market and sell your business. Make fixes or improvements that could enhance the value of your business.
Tasks
Upload or drag and drop the files below into eight folders on your drive or other file system. These documents will be needed for the Selling Memorandum (Step 4), as well as for Due Diligence (Step 12). Cross out items that you don’t have or that don’t apply to your situation.
- History and Nature of the Business
- High resolution company
- Pictures of company building/office.
- Copy of your certificate of
- Copy of your company articles and
- Copy of your partnership or operating Copy of your buy/sell agreement between owners.
- Copy of any permits, licenses or certifications required by federal or state laws to operate the business and the fees to transfer or renew.
- Products, Services, and Intellectual Property
- List of inventory and approximate
- Copy of issued trademarks, patents, or
- Description of unique processes and
- Description of trade
- Industry, Market and Competition
- Copies of product brochures, data sheets, pricing lists, catalogs and other product/service marketing and sales literature.
- Copies or screen shots of recent
- Copy of recent industry/market research
- Map of company’s served
- Competitive Analysis/Matrix.
- Growth projections for company’s served
- Customer Base, Customer Acquisition and Pricing Schedule
- List of major customers or a chart of the number of customers by product/service type and average sale per customer.
- Customer testimonials or online
- Copy of marketing plan and
- Copy of sales
- Copy of customer survey results, or Net Promoter
- Operations, Facilities, Equipment, Fixed Assets, Suppliers
- Copy of mortgage or lease (is it assignable?)
- List of all equipment and fixed assets staying with buyer and market value of each
- List of pending capital expenditures/upgrades, such as land, buildings, vehicles, equipment, and
- List of top suppliers/vendors and copies of agreements with
- Management, Employees, and Contractors
- Resumes of key people (especially those expected to stay with the business).
- Organizational List of all employees, designate part time or full time, their role, skill set, annual salary or other compensation, and length of time with company.
- Copy of all employment contracts and non-compete
- Copy of vacation schedules and benefit
- Copy of employee performance reports, engagement surveys or eNet Promoter
- Copy of stock option, bonus, pension, or other compensation
- Financials and Tax Records
- 3-year tax
- Copy of company’s Chart of
- 3-year profit and loss (P&L), balance sheet, and cash flow
- Copy of bank statements last 12-
- Schedule of all assets, net book value (cost less depreciation).
- Owner’s W2 statements (if salary).
- Seller Discretionary Earnings Worksheet (if business covers owner’s expenses).
- Schedule of contingent liabilities such as personal guarantees and
- Copy of budgets or proformas for next 12-36
- Legal, Regulatory, Risks or Threats
- Copies of any lawsuits or
- Copies of licenses, permits or certifications required to run the
- Copies of any environmental, regulatory or workplace deficiency
- Seller’s Disclosure Form (See Step 5).
Best Practices
According to the International Business Brokers Association (IBBA) and other groups that track small business sales, nearly half of all businesses put on the market by their owners fail to sell because of a lack of preparation. This includes unrealistic expectations on the part of the seller about the price of the business. We’ll cover valuation in Step 2.
The most important thing you can do when beginning this process is to put yourself in the buyer’s shoes. If you were buying the business, what would you want to know? How would you verify what the seller has represented is true and accurate?
This exercise lays the foundation for a successful sale. It helps you collect the content that will be needed in all the other steps. It will also inform you of what fixes or improvements could boost your valuation.
This can be a time-consuming and over whelming step. It can take several weeks or months. Break it down. Delegate parts to your partners, employees, or advisors.
Tools and Tips
There are two tools available to help you complete this step.
First, you have free access to the iREV Salability Assessment. iREV is an acronym for improve Revenue, Earnings and Valuation. It’s an exit planning system that helps business owners assess the strengths and weaknesses of their business (from a buyer’s perspective) and get suggested improvements. This system is exclusive to SellBiz. No other broker or advisor has it.
Contact me at mike@sellbiz.us to take the confidential assessment. No personally identifiable information is captured. It’s anonymous. It provides a baseline assessment and suggests what improvements you might want to undertake to boost your valuation and likelihood of a successful transaction.
Second, In the Examples section at the back of this guide is a Seller Profile form. This form will help you assemble most of the records and information you will need to sell your business. These are things most buyers will ask you for. The form is available digitally for easy editing and delegating to your team members.
Summary
A little preparation goes a long way towards successfully selling your business. A lot of preparation with some improvements can fetch you a higher price than you would have gotten without doing the prep work. In any case, completing this prep work enables you to take the next steps in the process with confidence. The result should be a quicker and more efficient selling process.
The two things you should spend extra time on are:
- Customer pipeline and/or user traffic metrics, and
- Accurate current and historical financials, and future
This information is crucial to every buyer. It is the lifeblood of every business. It shows past performance and future prospects of the business. The onus is on you to provide a clear picture of your business by providing detailed, verifiable data, on customers and financial stability.
Examples
- iREV Sellability Assessment
- Seller Profile Form