Business owners often reach the point where they decide to sell the company and move on to something else. You may have made that decision for yourself and are wondering what to do next. There are a few things you must do to protect your rights and interests through the process. You can trust the New York business lawyers of Rosenbaum & Taylor to work with you through it.
Here are some steps to prepare your company to sell:
Get the Books Ready
Anyone who buys your business will likely conduct extensive due diligence. This is the process by which a potential buyer determines a fair value to offer your company. However, a buyer can’t complete this all-important task without reviewing your company’s books. Those include financial and legal documents and other records that pertain to the business’s value.
Prepare Tax Returns, Bank Accounts, and Financial Statements
Gather and prepare your business’s tax returns, bank accounts, and financial statements. These should go back at least three years. Account for all business income and assets. For example, your business may own vehicles, equipment, or real property. Get the deeds and titles ready now. And if you have contracts with third parties, employees, and others, organize them.
Clean Up the Company
This isn’t a physical cleaning of your business (unless it also needs that). It means handling issues that may detract from the value of your company.
Have your operating systems been updated, or are they old and inefficient? Are you running on bloated inventories? Do you have any managers or employees who need to be let go? Or do you have unpaid debts and court judgments that present liabilities? Take care of these now rather than later.
Enhance the Value of Your Company
On the flip side, you may need to proactively enhance your company’s value. There may be existing business opportunities you haven’t yet jumped on. Maybe there are outstanding contractual obligations to wrap up. Or there could be ways to improve your sales and cut unnecessary costs.
It’s a bad idea to sell your company if more can be done to maximize its value. Taking care of these and other steps may make your business worth more.
Obtain a Third-Party Valuation
Knowing the value of your business can be useful when it comes to negotiating a price. While there’s no guarantee a buyer will pay the full value, a valuation does help. It provides an objective basis for the amount you will later demand.
The goal of a business valuation is to ascertain the financial health of your company. This will be done by considering internal factors like cash flow, assets, and accounts receivable. A valuation will also take a look at several external factors that may impact the value of your business. Those include industry trends, the overall market, and the location of the business. Organizing your books, as mentioned above, will make this process go more quickly.
Know What You Plan to Do Next
Your financial future begins after you sell the company. But have you decided what to do yet? You may want to start a new business from scratch or purchase another one. You may even enter into a new industry altogether. Or, like many sellers, it’s time for you to retire. Whatever comes next in your life, you need to be prepared.
For instance, determine the tax consequences of selling your business. How much money will you actually walk away with at the end of the day? Will it be enough to retire or start a new business? Working with a financial advisor, you can smoothly transition from this phase to the next.
Retain an Experienced New York Business Attorney
As you prepare your business for the sale, legal issues will inevitably arise. As an example, you may need to fire inefficient workers. Or there may be old debts and judgments to pay off. You will need legal advice along the way. And you will need the help of an attorney to write up the purchase and sale agreement.
That’s where Rosenbaum & Taylor comes in. We understand the needs of New York business owners and we know the relevant laws that affect them. If you’re prepared to sell your company, have a conversation with us first. You can schedule a consultation today.