How to Prepare Your Business for Sale

So, you have decided that it is time to sell your business, what steps should you take to prepare for a sale? Ideally this undertaking should start several years prior to selling. Why so? Buyers and lenders typically want to see a minimum of three years’ worth of financial data, so your house needs to be in order. If you look at the various business sale success statistics online, you will not see a pretty picture. Most small businesses listed for sale, in fact do not sell. In my opinion this is due to poor planning (or no planning at all). Entire books can be written on how to properly prepare, but we will focus on two easily controllable items.

#1 – Financials

Financials statements need to be up to date and accurate, this is non-negotiable. Taxes need to be current and accurate. Businesses are valued based on tax returns. Common tax avoidance measures will destroy the value of your business. Buyers and banks do not get involved with tax fraud. 3 years of clean taxes minimum.

#2 – Clean House

Literally clean house. If its trash throw it away. If it’s a shiny object that you do not intend to include in your business sale, remove it from the premises. If you’re selling a car, you run it through the car wash and throw some wax on it – same principle here.

With these two steps above your business will be in a better place than most other businesses for sale. There are currently 1178 listed businesses for sale in the state of Arizona. Like it or not, you are in competition with these listed businesses, and only a limited number of buyers. How will you stand out? The easiest and most basic way to make your business more attractive is to plan in advance for a sale.