Are you contemplating selling your business or creating an exit strategy? It could be tempting to jump into the process of selling your business without hiring...
How to Sell a Business: Preparation
Preparing your business for Due Diligence
Preparing your business to sell greatly increases the chances that you will actually sell it.
Preparing your business for due diligence is simple. It involves preparing and organizing the typical documents that most buyers will request and review during the due diligence period.
Why should I prepare for due diligence? Can’t I just get the documents ready when the buyer requests them?
- By preparing in advance, you may convince the buyer to agree to a shorter due diligence period, perhaps as short as 7-14 days. Your reasoning is that all the documents are prepared, organized, ready for review and the process will be quick and simple. Immediately after an offer is accepted, the buyer can start reviewing the documents.
- By demonstrating to the buyer that you have prepared the business for sale, you tell the buyer that you are serious. Buyers like dealing with serious sellers. Believe it or not, many sellers “throw” (their words, not mine) their business up for sale because they are curious what buyers think of their business and are trying to determine what it is worth. After a buyer has encountered an unmotivated seller, they become quite interested when they know you are 100% serious and have all your documentation in order. Buyers are more likely to spend time with a seller whom they know is serious and has prepared for the sale.
- You greatly increase the chances of receiving an offer by demonstrating to the buyer that you have prepared and organized all documents needed for due diligence. Many times, buyers are reluctant to make an offer on a business because they believe you have little information for them to perform their due diligence.
What other tips do you have for me? If you have prepared your business for sale and organized these documents, it wouldn’t hurt to mention that in your ad copy. It could say something like this:
“I am a very motivated and serious seller and have prepared my business for sale with the help of my CPA/Broker. I have all documents ready for due diligence, including financial statements, tax returns, bank statements, lease, equipment list, etc”.