How To Prepare To Sell Your Business: Steps To Take Now Susan Wissink Fennemore Craig

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Important Steps To Take Now Prepare your books and records for a potential sale Obtain buy-in from your owners and key executives Remove potential deal breakers and correct weaknesses in your business from a legal standpoint Consider a third party appraisal Consult with proper advisors – investment banker, accountants, and legal counsel Prepare a comprehensive summary of your business

Prepare books and records for a potential sale – corporate documents Review your existing governance documents Update governance documents to reflect correct owners and business operating procedures Formalize informal agreements among owners, particularly if agreements are not in writing Verify that you have complied with legal requirements for holding meetings, filing annual reports, and updating your address and statutory agent

Prepare books and records for a potential sale – corporate documents Ensure that all ownership documents are up-to-date and reflect correct percentage ownership of each owner Review any options, grants or warrants that may be triggered upon a sale Ensure that no rights of first refusal or rights of first offer exist, and if they do, verify that you comply with them Review your intellectual property and consult with counsel about protecting it

Prepare your books and records for a potential sale – business documents Review customer and supplier contracts, real estate leases, equipment leases, permits and licenses to determine impact of sale Prepare or update list of all assets of business Prepare or update list of personal assets that are on business property but would not be conveyed in a sale Verify that company policies and procedures are documented properly

Prepare your books and records for a potential sale – business documents Create binders or folders for all employee benefit plans Summarize staff positions, salaries and other pertinent issues Review all employment agreements, if any, to determine impact of a sale Ensure that all financial records are correct and complete Update customer and supplier lists and other important customer and supplier information

Prepare your books and records for a potential sale – other “clean-up” items Take a physical inventory of your equipment and inventory Consider disposing of obsolete equipment and inventory Clean and organize your office and/or facility Ensure that your company is properly staffed Keep plans and clean-up as confidential as possible

Obtain buy-in from owners and key executives Call a meeting of owners to discuss plans and obtain buy-in Determine who, if anyone, in the company you will tell about the transaction Formulate a plan with key executives and owners to respond to inquiries about potential sale from within or outside the company Understand the rights of your minority shareholders and obligations to them

Remove potential deal breakers Assess pending or threatened litigation and resolve matters that can be resolved Remove any restrictive covenants against your company, if possible Resolve contractual disputes Evaluate and resolve, when possible, all other outstanding legal, tax, banking or financial issues Ensure that you have title to all assets, including patents

Other Preparation Consider a third party appraisal Consult with proper advisors – investment banker, accountants, and legal counsel Prepare a comprehensive summary of your business Determine marketing strategies for sale Assess type of buyer for your business

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