As growing numbers of baby boomers enter retirement age those who own their own businesses are faced with the challenges of generating an exit plan. An exit plan requires not only preparing yourself mentally for retirement but also readying your business for sale.
A recent article in the Northern Colorado Business Report discusses obstacles business owners face when valuing and selling their business. The article outlines some simple steps business owners can implement to maximize the value and to enhance the marketability of the business. To that end, the following are some simple steps that can help business owners ready a business for sale.
- Formulize and document company processes and procedures
- Prepare or update employment manuals
- Organize and update corporate documents such as Secretary of State filings, meeting minutes, buy-sell agreements, board resolutions and shareholder consents
- Get due diligence materials such as leases, insurance materials, other contracts and financial information organized
- Make sure licenses and permits are current
- Update customer and vendor lists
- Consider sale terms such as an ability to stay on as a consultant during the transition period
- Retain legal and tax professionals to obtain advice regarding tax implications and strategies to minimize risk in the sales transaction
Before providing these materials to prospective purchasers it is critical to have confidentiality agreement in place to protect the information from disclosure should the sale not close. However, the implementation of these steps will have a positive effect on the valuation of your business and will help to facilitate a sale.
If you would like more information regarding the potential sale of your business, please contact our Business Law Group partner, David A. Closson at [email protected].