What are the processes and strategies involved in selling a business? A certified business valuation performed by a member of the Business Appraisal FL|GA|HI team is an important component of the strategy implementation process. However, it is just one of several steps. So, here’s a business exit strategy checklist from our sister company, Bankers Advocate, for a smooth departure from business ownership:
Table of contents
Exit Strategy Checklist
- First, to determine market worth, do an accredited or recognized business appraisal. This attracts serious bidders more immediately, safeguards your investment, and maintains the price during negotiations.
- Next, review the appraisal with you. This will sssist you in deciding whether to proceed with the transfer or sale of the business, or whether to begin upgrading it in order to optimize value for a future exit.
- Initiate the marketing process with a Consulting Agreement and begin the Tax Minimization Analysis.
- Then, to showcase your company to prospective customers, create a professional Business Profile. Prepare a thorough Offering Package that includes all of the information a buyer may want. When buyers have to wait for these supplies, their enthusiasm wanes.
- Prepare your business’ pre-financing (for the right potential buyer). This, along with the evaluation, are critical components in managing price discussions.
- Any noticeably delayed maintenance should be recommended. When prospects see objects that need to be repaired, they ponder about what they can’t see.
- Then, check to see if the leases on your facilities and equipment are transferrable. To prevent derailing a possible transaction, we may need to renegotiate these upfronts in some circumstances.
- Create and implement a target marketing strategy. Despite its simplicity in idea, this is a substantial collection of work. We’ll use our network and a variety of websites to market your product as part of our strategy.
- Before disclosing private information or take up your time with new inquirers, we match your business with eligible buyer prospects currently in the queue, and we evaluate new inquirers for financial strength, business skills, and other qualities.
- After the Confidentiality Agreement is signed, review the Business Profile with qualified prospects.
- Prospects who are interested and qualified should come to the business. These visits are always planned in collaboration with you.
- Assist potential first-time buyers in becoming familiar with and comfortable with the business buying process.
- Prepare an offer and acquire a deposit when a prospect is ready.
- You will be presented with (all) offers.
- Next, accept or reject the proposal.
- Then, both parties must complete and sign Disclosure Statements upon agreement of the sales price and terms and there is acceptance of an offer. Both the buyer and the seller benefit from full disclosure.
- Due Diligence on the part of the buyer. If the business is as described, the buyer waives the conditions and the deal closes. The deal is renegotiated or canceled, and there will be a refund of the deposit check if due diligence does not support statements.
- When required, assist the buyer in obtaining finance approval.
- Make sure the whole transaction is documented in writing, including any contingencies and contingency deletions. People forget things that aren’t written down, which can lead to conflicts and litigation.
- Prepare the closing attorney’s escrow instructions. The instructions will include a notification to creditors of the bulk sale, which will reflect the conditions of the purchase agreement.
- What happens in Escrow:
- Serves as a neutral communication link to all parties in the transaction
- Verifies escrow instructions
- Request Publication, Recording, and UCC lien search
- Complies with the lender’s requirements
- Request any demands from existing lienholders
- Receives purchase funds
- Prepares or secures other documents related to escrow
- Prorate taxes, interest, rents, security deposit, etc.
- Records UCC-1 and UCC-2.
- Closes escrow upon completion of instructions
- Prepares final statements for the parties, which account for the disposition of escrow funds
- Disburses funds as authorized, including lien payoff and commissions
- A partial list of items/answers needed to open Escrow:
- Purchase agreement and addendums
- Contingency removals
- Sales tax number and applicable licenses
- Seller and buyer names, addresses, SSN’s, tax ID’s
- Deposit check
- Lease info – rent amount, deposit, assigned through escrow or new lease, etc.
- Estimated possession date, closing date, pro-ration date
- Insurance Policies info – assumed or new policies
- Tax information. Seller’s property tax bills
- Required license information – are they transferable?
- If corporations – names of officers authorized to sign
- Allocate purchase price to Goodwill, Fixtures, and Equipment, Leasehold improvements, Licenses, Non- compete, Inventory, and other assets guided by the Tax Minimization Analysis.
- Inventory- Taken by buyer and seller or a third party?
- Will the seller warrant machinery and equipment?
- Will the seller warrant against any pending accusations, citations, or violations?
- Will a health or fire inspection be done? Will the seller pay reparations?
- Any contracts, leases, or agreements to be assumed
- Before Closing: take care of any issues that many times arise.
- Lastly, Close & Celebrate!!
Ready to start your Exit from Business Ownership? Then call 561-325-9777 or email to find out what your company is worth through our professional valuation services…