How to Sell a Company

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Selling a company is not only emotionally difficult, but it also requires putting your affairs in order so that you can reap the maximum amount of benefit from the sale. By keeping a few key points in mind, you can take some of the sting out of selling the company and realize the best return possible. This article will outline the process of selling a company

Things You'll Need

  • Inventory
  • Financial accounting records
  • Client list
  • Tax documents
  • Listing of short term and long term debts

Selling a Company

Get your accounting books in order. Before anyone will consider buying your company, they will want full disclosure on what revenue is generated, the average monthly cost of operation, any profits that are generated and information about any outstanding obligations. The accounting records may be manual or housed in software, but make sure they are constantly updated and correct.

Prepare an inventory of all equipment and other assets that are included in the sale. This will include all office equipment, production machinery, software, replacement parts and raw materials used in manufacturing the goods sold by the company. Assign current market values to each line item in the inventory.

Compile an inventory of all finished goods currently in storage. This will provide the prospective buyer with an idea of what would be on-hand to fill customer orders on the day he or she assumes control of the business.

Provide copies of all tax records and documents, including quarterly reports, payments and annual tax returns. All these documents help to demonstrate that there are no hidden surprises for the new owner after the sale goes through.

Share the client list. This helps to provide the prospective buyer with an idea of the foundation he or she will have for generating revenue on a continuing basis. A strong client list is especially helpful if you are looking to sell the company to a competitor.

Be honest on all fronts. Discrepancies between what you say and what research turns up will hurt your credibility and often kill a potential sale.

Tips & Warnings

  • When sharing proprietary information with a prospective buyer, always obtain a signed confidentiality agreement before sharing anything other that public data. Failure to do so could result in some unpleasant situations that will decrease the chances of selling the company.
  • Along with sharing information on your company, take steps to independently establish that a potential buyer has the resources to purchase your company. If your investigations indicate the buyer does not have resources on hand and would have trouble obtaining resources to purchase, thank him or her for their interest and move on to the next potential buyer.

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