Q: I am the owner of a business and have decided the time is right for me to explore a sale of the company. Is there anything I should be doing to prepare the company to be sold?
A: It is rarely easy to decide when the time is right to sell a business, but there are a number of steps you can take now that will make the sale process smoother and maximize the value of your business to a buyer. A few of things you can do prior to finding a buyer include the following:
1. Define Your Objectives. Figure out what exactly you are looking to gain from the sale. Is there a certain dollar amount you need to realize to make the deal work? Are you looking to make a clean break from the business, or are you willing remain involved with the business post-closing to help with the transition to the new owners? Having a clear understanding of what you are looking to achieve will help evaluate and weigh offers.
2. Build Your Team. Selling your business can be a complicated process and it is important to have trusted professional advisors to assist you and represent your interests in the transaction. Typically, this will include legal counsel and accountants with experience in corporate M&A transactions. You may also want to engage an investment banker or business broker to help market the company and maximize the deal value.
3. Prepare the Business. Once your team is in place and your objectives are clear, you should examine every aspect of the business and make the appropriate adjustments to maximize the value to a Buyer. This may include thing such as:
- Reviewing the corporate records to ensure the company is up to date on all required filings and registered in each jurisdiction where it conducts business;
- Reviewing customer and supplier contracts and real estate leases to make sure they are assignable to a buyer and that they will not expire or require renegotiation within the time frame of your sale; and
- Review agreements with key employees and consultants to make sure key terms are included, such as intellectual property assignments, if applicable.
These are just a few of the steps a business owner looking to sell the company should take before a sale, but an experienced team of advisors (see Step 2 above) will undoubtedly have additional recommendations and suggestions that will help facilitate the sale process and maximize the value of your business to a buyer.
Know the Law is a bi-weekly column sponsored by McLane Middleton. Questions and ideas for future columns should be emailed to email@example.com. Know the Law provides general legal information, not legal advice. We recommend that you consult a lawyer for guidance specific to your particular situation.