You thought starting your business was difficult. Just wait until it's time to sell your business.
The list of details and documents that need to be addressed can be overwhelming. Although you'll have the benefit of assistance from your broker and other professionals, you need to know what you're getting into before you start approaching potential buyers.
Closing a business sale really involves two separate processes. The first revolves around the details that are necessary to execute the deal, the legal transaction through which ownership of your company is transferred from the seller to the buyer. The second process is less formal, but just as important. It includes executing all of the practical considerations involved with transitioning to a new owner and possibly a new management team.
For sellers, a business exit can be a highly emotional experience. Instead of trying to devise a plan when your head is swimming with thoughts and emotions, it's better to create a business sale closing checklist long before the sale occurs. Here are some of the items your checklist should include.
- Sale documents. There is a long list of sale-related documents that needs to be completed during the execution of a business sale. These include the Letter of Intent, an important document that is generated after the seller and buyer have reached agreement on the major issues. Once this document has been signed, the closing process kicks into high gear.
- Asset agreements. During the closing process, you'll need to make sure all of the company's assets have been properly documented in asset agreements and other vehicles that specify their inclusion in or exclusion from the transaction.
- Access to financials. You may need access to financials after closing for tax purposes. The closing documents should either include provisions for access to financials or the to-date financials themselves so you can file your final business tax return.
- Lease transfers. The issue of whether or not your lease is transferable has probably been addressed earlier in the process. Now it's time to execute the transfer so the new owner's name appears on the lease instead of your name.
- Vehicle titles. Company vehicle titles may also need to be transferred at closing. Make the necessary preparations by contacting your DMV or consulting your attorney.
- Vendor updates. In the days leading up to the closing, contact all of your company's vendors to clue them in on the pending change of ownership and to establish the fact that you will no longer be personally responsible for the account.