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Looking to sell your business? Here’s what you should do

You have an idea for a business. You create a product, find funding, develop a market. Your business thrives. Now it’s time for you to move on to another venture. It’s time for you to sell your business.

What do you do now?

A qualified, experienced attorney can help. Here’s a simple list of things you should consider:

Some simple steps

First, figure out how much your company is worth. Of course, to you the company is invaluable. It is the repository of your sweat and tears for years.

But objectively, your business is worth only so much. How much? Get a third-part valuation to find out. One expert says a back-of-the-napkin valuation is three to six times the annual cash flow.

Next, have an accountant to produce clean financial statements and tax returns for at least the past three years.

Clean up your sales profile as well. If one customer accounts for more than 20 percent of your sales, you’ll have a hard time finding buyers. Diversify your customer base.

You should also jettison marginal staff and equipment. A buyer wants the best possible face on the business.

As long as you’re hiring an accountant and a business appraiser, you should also hire a business broker who can offer you a network of potential buyers. The broker will create a prospectus and market it to a much wider range of buyers than one you have access to.

The business broker can help with due diligence as well. The buyer will take a look at every aspect of your business and you need to be prepared to offer those documents.

Make sure your buyer has money

As long as the buyer is performing due diligence on your business, you should perform due diligence on the buyer: Make sure your buyer has access to the funding necessary to buy your business. Many buyers are unable to secure funding, and often banks will want to see the business the buyer is buying before they issue a loan.

Last, get an accomplished attorney who knows the business of selling a business. The closing asset purchase agreement should include items such as physical and intellectual property, noncompete agreements, landlord-lease agreements, asset listings, guidelines for the use of online domains and so on.

When you sell your business, you need to make sure you have all the information necessary to have the deal go through. A qualified, experienced attorney is the one thing that will protect you as pen hits the paper.

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