Sell
Your Business Tips, Hints & Techniques:
Enter
your name & e-mail address below and each week I'll send you
detailed tips, facts, resources & ideas you can use right
away to help sell your business faster and for more money.
Step
5 - Conduct Due Diligence
Due
Diligence Checklist
In
order to make the due diligence as smooth and easy as possible
you should have any paper work, records and contracts that the
buyer may request immediately available.
Of
course much of what is listed in the due diligence checklist
below are things that you collected, organized and spruced up
at the beginning of the selling process. So hopefully much of
your preparation work is already done.
It is not your
job to do the buyer's due diligence for them, but you are responsible
for providing them with organized paperwork, tax returns,
contracts etc. on demand so they can do they work they need
to as quickly as possible. Buyer's may begin to feel pressure
build as the closing of the deal approaches. The degree to which
you are organized and efficient can go a long way to maintaining
the momentum. The last thing you want is for the buyer to
become paranoid thinking that you are dragging your feet
So
make sure you have the following checklist information available
before the due diligence phase officially begins:
1.)
Tax Returns: Buyers will usually want to see the last 3
years tax returns. Some buyers may request up to 5 years of
returns
2.)
Detailed Financial Statements: As we stated in the Preparation
Section, it is important to have your financial statements
as organized and professional looking as possible Depending
on your situation, you may have already shown the buyer your
actual financial statements, but in many cases they will have
only seen your recast
financials. As with your taxes returns, most buyers
will want to see 3-5 years worth of statements.
3.)
Leases: Especially for location sensitive businesses, the
buyers will want to see the exact terms of the lease. In addition
to the rent and the amount of time left on the lease, the buyer
will be particularly interested to confirm that the lease
is in fact transferable to a new owner and under what conditions.
4.)
Real Estate Related Paperwork:If the sale includes the real
estate you will have to provide information on all mortgages,
deeds of trust and other liens or debts that may affect the
title.
5.)
Contracts:Contracts with both suppliers and customers as
well as employees. The buyer will be interested not only in
the terms of any contracts but will also want to verify the
contract is transferable to a new owner.
6.)
Accounts Receivable: In many small business sales the owner
retains the accounts receivable. But if the accounts receivable
are a part of the deal the buyer will want to see the aging
of them and also how many accounts have a history of paying
late.
7.)
Corporate Or LLC Records: This obliviously only applies
to entity sales
8.)
Licenses & Permits: Not only will the buyer want to
see all the licenses and permits that are required for your
type of business but they will also be interested to find any
problems that might prevent them from being renewed.
9.)
Intellectual Property: This would include any and all patents,
copyrights, trademarks and service marks. Also included in this
category would be any trade secrets: recipes, unique processes
or procedures, customer lists and supplier lists.
10.)
Inventory: Some buyer will just do a spot check of your
inventory, others may take the time to count, inspect and value
every single item.
Sell
Your Business Tips, Hints & Techniques:
Enter
your name & e-mail address below and each week I'll send
you detailed tips, facts, resources & ideas you can use
right away to help sell your business faster and for more money.
NEXT:
The
Red Flags Buyers Look For During Due Diligence
