OK, so after years, maybe even decades, of owning and managing your business, you now think it is time to sell. What is the very first step you should take? Speak with a business broker? Consult your attorney? Your CPA? No, no, and no.
Without question the very thing you should do falls solely on you: locate and review carefully all your leases (operating, real estate, equipment, etc.), licenses, customer purchase orders, vendor codes, blanket orders, supplier contracts, floor plan arrangements, consignment relationships, and the like.
Why? I have experienced first-hand the angst of getting within days of closing on a business transaction only to learn that my client, the seller, despite assuring all stakeholders that there would be no problem getting all appropriate and required (by both buyer and bank) assignments, encountered unexpected red tape or other unanticipated difficulties obtaining what then became something far beyond no problem approval.
Leases, licenses, purchase orders, vendor codes, contracts, floor plans, etc. are valuable goodwill assets of your business for which the buyer is paying and obviously expects to transfer unencumbered at closing. You must assess what arrangements are included in the goodwill component of the price of your business. For each item you will possess written documents which must be examined closely to learn if there are restrictions which might preclude transfers to the buyer, and if so, what are the steps necessary to pass your goodwill components smoothly and legally to the buyer.
If you have relationships with governments (federal, foreign, state and/or municipal), institutions (military, health networks, banks, leasing companies), landlords, major customers, large vendors, etc., you could learn that the transfer of these important assets could be far more difficult than common sense would indicate.
Job #1 – gather up the documents associated with your company’s valuable relationships for you to review carefully to make sure you are positioned properly to transfer said relationships easily and timely to the buyer of your business. I promise you that this will make the always difficult nature of selling a business less trying.