How to Prepare Your Business for Sale in 2018
Business owners who are close to the finish line and are contemplating the sale of their business need to be prepared for a myriad of business & legal issues that prospective buyers will bring up during the due diligence phase of a sales transaction. Playbook Advisory identifies 10 common issues for business owners to consider prior to the listing the business for sale in 2018.
10 Issues Sellers Need to Review Prior to Listing
Complete an Internal Legal Review or Audit:
Is the Company in Good Standing; Confirm the company is in good standing (Illinois: https://www.ilsos.gov/corporatellc/) in all states where they do business. If your business has a physical presence in an outside state, you are required to register for a “Certificate of Authority.” Failure to do so will cause the forfeiture of certain rights and may result in costly retroactive penalties.
Business Records: Having good records will help to eliminate an opportunity for prospective buyers to seek a reduction of the purchase price after a Letter of Intent (LOI) is executed.
Business and Professional Licenses:
- Check status of all required licenses.
- If licenses are found to be not current -file for reinstatement
- Background and credit checks permissible with written consent.
- Workers must be properly classified as employees vs. independent contractors.
- I-9 immigration compliance for all current employees.
- Overtime pay required for all non-management employees
Appraisal of Business: Independent appraisal will educate seller about worth of business.
- Note- In our opinion, this is only relevant for those companies greater than $10mm in annual revenues.
Disclaimer: Business owners are highly encouraged to seek out professional legal representation prior to listing a business for sale.