Pre-Sale Checklist for Selling Your Business

Graphic of tax symbols: Checklist for Selling Your Business: Key Steps & Tips

A pre-sale checklist is a good way to ensure you have all of the details before selling your business. This will get you somewhat ahead of the due diligence list that will be provided by the buyer.

Sunbelt can provide you with a ‘sellers questionnaire,’ which you can use to pre-screen buyers and prepare for the sale.

If you wish to follow a custom checklist, here are several items you can consider including in your list:

5 Years of Tax Returns in a PDF Form

Your tax returns are very important for buyers. They are legal documents and public records that you can obtain from the IRS, state, county, or city. Ensure that the tax records are readily available.

Year-End P&L Statements

P&L statements indicate the income, expenses, and net profit within a specific period. The records can show the company’s financial health. You can prepare these yourself in Excel or Google Sheets or hire an accountant.

Year-to-Date P&L Statements

These P&L statements cover the current year up to the period when you execute your business sale. They can be monthly or quarterly and are crucial in calculating your tax liabilities.

Recent Balance Sheet

A record of your company’s financial health, this sheet indicates what you owe (liabilities), what you own (assets), and the difference between them (net worth).

Inventory that Will Go Along with the Sale

Having an inventory list allows you and your potential buyers to understand what they are buying and how much they need to pay. A clear inventory of all assets will help you get a better price for them during negotiations.

Asset List/FF&E with a Ballpark Value If Needed

When you’re selling your business, an accurate asset list indicates what the buyer is purchasing and the value of the business assets. Try to include ballpark values for each item on the list, including real estate.

List of Employees/Position/Tenure/Benefits/Vacation Time

You should include the number of employees you have on your payroll. Your buyers may inquire about the status of the contracts and the benefits that each staff member receives. A valued long-term employee can be considered an asset to the business.

List of Licenses Required

Compile a list of licenses needed to run the business. Indicate the validity of the current permits. Business brokers can help you classify the permits according to their expiry period.

Pending Lawsuits/HR Type Issues

You may also want to consider disclosing pending litigation even if it doesn’t directly involve your business or industry. Stating any HR issues can reduce any surprises during the negotiation process.

Contracts with Recurring Customers

It’s prudent to include contracts with key customers, vendors, and suppliers. The disclosure may also include any agreements with lenders, enabling buyers to plan the future effectively.

“Churn Rate”

If you’re selling a business that has recurring revenue or contracted customers, buyers may want to know how many customers you’ve got and how often they leave. The churn rate is the number of clients that leave your company over time. It provides insight into keeping customers long-term vs. constantly seeking new ones.

Contact Sunbelt Business Brokers

Developing a comprehensive checklist can be challenging. At Sunbelt Business Brokers, we have experience marketing business sales in over 200 markets. Our seller questionnaire can help you maximize your due diligence efforts.

This approach ensures that you have everything in order before receiving any proposals. Contact Sunbelt Business Brokers today to schedule a free consultation.