Many business owners reach the point where it’s time to sell the company and move on to something else. If you’ve reached that decision, you might be wondering what to do next. Following a few basic steps can save headaches and help you get the most out of the sale. Let the Connecticut business attorneys of Aeton Law Partners work with you. We know Connecticut business law and how it impacts the sale of companies.
The following are some steps to get your company ready to sell:
Gather and Organize the Books.
Potential buyers will want to know what the company is truly worth. This is done by way of due diligence. But a buyer can’t determine a fair amount to offer without seeing the company’s books. These include financial and legal documents, along with other records that affect the value of the business.
Start with gathering your company’s tax returns, financial statements, and bank account statements. You should have no fewer than three years’ worth of these. Next, account for the company’s income and assets. Are there, for instance, vehicles your business owns? What about equipment or real property? Get the deeds and titles now so you can show what the business actually owns.
Clean Up the Business.
This is not a physical clean-up (unless one is needed). Instead, you need to take care of any matters that may reduce the value of the company.
For instance, does your company have bloated inventories? Are there managers or employers who are unproductive and need to go? When was the last time you updated the company’s operating systems? Handling these now can get rid of dead weight that detracts from what your company is really worth.
Maximize Your Company’s Value.
Conversely, you may need to take proactive steps to maximize the value of your business. For example, there may be business opportunities your company hasn’t yet taken advantage of. Or there could be contractual obligations to complete. You may have ways to improve sales and reduce unnecessary expenses.
Before selling your company, find out if more can be done to enhance its value. Addressing these and other issues could make it worth more.
Get a Third-Party Valuation.
When it comes to negotiating the sale of your business, you need an objective dollar value. This is where you need a third-party valuation. While your business may not sell for the amount stated in the valuation, it adds legitimacy to the price demanded.
A business valuation determines the financial health of a business. It considers internal factors such as accounts receivable, cash flow, and assets. It also takes a look at external factors that have an effect on the company’s value. These include industry trends and the location of the business. If you’ve already organized your books, this step will be much easier.
Plan What You Want to Do Next.
What will you do after you sell your company? You might want to start or purchase another business, perhaps in another industry. Or you might decide to take the profits and travel for a while. Many business owners sell their interests so they can retire. No matter what comes next in your life, preparation is key.
For instance, if you wish to buy into a new industry, you need to learn about it. You also need to know how much money you’ll have to work with in your new business. That means knowing the tax consequences of the sale of your existing business, and how much money you’ll take home.
Talk to a Knowledgeable Connecticut Business Law Attorney.
Legal issues will inevitably arise as you prepare your business for a sale. You may need, for example, to negotiate the payoff of an old, outstanding court judgment. A business lawyer is indispensable when it comes to preparing to sell your company. Your lawyer can also write up the necessary paperwork for the transaction, like a purchase and sale agreement.
Regardless of what type of business you want to sell, we at Aeton Law Partners can assist. We know Connecticut business law and how it impacts owners’ bottom lines. Give us a call today to get started with the sale of your company.