It has been said that if you fail to plan, you are planning to fail. The saying holds true when you are selling your business, too. When selling your business, you want the transaction to go smoothly, and ultimately, you want the sale to be successful. Before putting your business on the market, you must collect as much information as possible, as any potential sellers will want to see certain documents.
You will need a lot of documents when selling your business, and the earlier you start collecting them, the better prepared you will be for the sale. If you are getting ready to sell your business, below is a list of documents you should have ready.
Consulting an experienced business lawyer can bring you peace of mind knowing the transaction will be as smooth as possible. Call Beth Santilli Law today at 843-216-0009, or fill out our online form to schedule a consultation and learn more about how we can help you prepare for the sale.
The financials of your business are one element your business buyers are going to be most interested in. Speak to your accountant and ask them to prepare the latest financials of your business, knowing that this could take several weeks, or even months. The financials are one of the most important documents, or packages of documents, sellers will want to see, so make sure they are all ready to go.
Real Estate Records
If you own the physical location of your business, you should provide information about the title and deed, and inform the buyer that they will have to get a new mortgage in their own name. If you rent or lease the location of your business, you should provide the potential buyer with this information, as well. These documents will help your lawyer start preparing for the transfer of the real estate property.
Leases and Contracts for Equipment
It is not uncommon for business owners to rent out certain types of equipment, furniture, and other items around their business. If you have leases for anything within your business, a buyer will likely assume the lease once the transaction is final. Having these leases on hand will shield you from potential liability for the lease, while also satisfying the buyer.
If you have equipment that you own and that will be included in the sale, you should also prepare any documents pertaining to those items. Some equipment may still be covered under warranty, or you may have purchased additional warranty protection on some equipment. If the equipment is still under warranty, that could increase the value of your business.
Your customer list is likely why a buyer is purchasing an existing business rather than simply starting their own business. The customer list is extremely valuable and can only increase the value of your business, putting dollars in your pocket. Prepare your customer list and prepare to include it as part of the sale. You need to ensure that a Non-Disclosure Agreement is in place when sharing any of the listed information, but this is especially true when sharing any customer list.
Licenses and Related Information
Many businesses need certain licenses to operate, and the same is likely true for yours. You can transfer some types of these licenses to a buyer, while others are considered non-transferrable. For example, if you run a restaurant that serves cocktails, you will need an alcohol license, which you cannot transfer to a buyer. However, it is important to let buyers know that they will need to obtain a license, and any information you have about obtaining one.
Another benefit for buyers purchasing an existing business is that they do not have to take the time to set up certain aspects of the business, including its suppliers. Before handing over your supplier list to any potential buyer, let our business lawyers in South Carolina review the list and any supplier contracts first. A lawyer will review the contracts to determine if you have to terminate it. A lawyer will also contact the supplier to learn of any potential issues with terminating the contract early.
Information About Business Vehicles
If your business owns a vehicle and you will include it in the sale, you should also provide this information to the buyer, as well as your lawyer. You will have to transfer ownership of the vehicle through the Department of Motor Vehicles. Also, potential buyers may want to conduct searches and complete inspections of any business vehicle.
After you sell the business and all its assets, you will likely cancel any insurance policy you took out for your business. Still, make copies of any insurance policy you have, as the buyer may want to use the same insurance broker or mirror your coverage.
Trademark, Copyright, and Patent Information
Intellectual property assets such as your trademark, copyright, or patent will likely be assigned to the purchaser after the sale. During closing, you will have to make separate assignment filings to transfer ownership of these assets to the buyer. A South Carolina business lawyer can also help with this aspect of the process.
Employee and Benefit Information
Another asset any potential buyer may be interested in are your employees. Create a list of your employees, including all of their information, such as their contact information. If you offer benefits to your employees, such as health insurance, you should also provide the buyer with this information, as well. Additionally, if a union is associated with your business, the buyer will likely assume those obligations, so it is important to have this information available. Again, you need to ensure that a Non-Disclosure Agreement is in place when sharing any of the listed information in this Article, but this is especially true when sharing any employee list.
Other Important Documents
There may be certain documents that are not listed above, but that are very important to pass on to the buyer. For example, you may have recently prepared a business plan for the future growth of your company. If this is the case, you should provide this to the buyer, too. The more information you can provide to the buyer, the more attractive your business becomes to them.
Get Legal Help Today
If you are selling your business, the experienced business attorneys at Beth Santilli Law, LLC, can ensure you are properly prepared so the transaction proceeds as smoothly as possible. Call us today at 843-216-0009 or fill out our online form to schedule a consultation and to learn more about how we can help you prepare for the sale.