Checklist: 20 things to do before selling your business
Follow these 20 steps before talking to buyers, and you will be in a better position to negotiate good terms.
Even if you’re not planning on selling your business in the short term, you should be aware of what could trip up your sale in the long term.
Follow this 20-point checklist, and you’ll be in a much better position when that time comes, having preemptively solved the common issues that slow down negotiations, and put the potential buyer in a stronger position to negotiate.
Consult with any co-owners to ensure you all have the same or similar objectives, or agreed approaches that are satisfactory to all stakeholders.
Collect, safeguard and (if applicable) separate your data and IT systems to the extent required to ensure that after the sale is completed, the buyer can readily access and use all necessary data.
If you own multiple businesses, then to the best extent possible and in a cost effective manner, separate the businesses proposed to be sold from the others to be retained.
Avoid “change of control” and other rights in your documents that may allow customers and suppliers to amend or terminate their contracts with your company following a sale.
Avoid your customers (or suppliers) becoming attached to you personally — encourage multiple contact points within your business.
Make sure you have strong succession plans, processes, policies and other documents.
Provide incentives for your employees so they are more likely to remain after a sale.
Encourage employees to take their long service and other leave before the sale is completed.
Take even more care than usual to recover debts before they become bad.
Give your lenders as much notice as possible to reduce break fees.
Register (or at least apply for registration of) all your important registrable intellectual property and confirm the ownership of your domain names.
Ensure you have all the required authorisations to conduct the business and investigate whether any consents will be required for the buyer to continue the business (and, if so, the likely timeframe for obtaining these consents).
Consider whether any buyers are likely to have any other regulatory hurdles or concerns, including changes in the law.
Consider whether any of your accounting practices are outdated or likely to create confusion or distrust.
Resolve any health and safety or other compliance issues.
Ensure all liabilities are identified and managed as carefully as possible.
Replace “trapped cash” like security deposits. For example, consider using bank guarantees instead, as a buyer may not give you value for unusable cash.
Transfer personal assets out of the business and sell any other assets that are not necessary or desirable for the conduct of the business.
Remove as many personal property security registrations and other impediments over relevant shares and assets as possible.
Ensure your documentation is clear, well organised, dated and fully executed.
