ABC’s of Preparing to Exit

Preparing for an Exit: Steps to Get Your Business Ready for Sale

Preparing your business for an exit is a process that requires careful planning and attention to detail. Here are some key steps to ensure your business is ready when the time comes to sell.

• Organize Financials: Ensure that all your financial records are up to date, accurate, and transparent. Prospective buyers will scrutinize your financials, so it’s essential to have a clear and detailed account of your business’s performance. Your attorney should work with an independent CPA to ensure that there are no red flags in your financials.

• Improve Operations: Streamline your operations to make your business more attractive to buyers. This could involve automating processes, cutting unnecessary costs, or improving customer service. Don’t forget to make sure your business can run smoothly without you.

• Legal Review: Conduct a thorough legal review of your business. Make sure all contracts, intellectual property rights, and other legal matters are in order. This step can prevent last-minute legal issues from derailing a sale.

• Strengthen Management: A strong management team can increase the value of your business by showing that it can continue to thrive without your direct involvement. Consider training or hiring key personnel who can take over once you exit.

• Compliance: If you are in a regulated industry like healthcare, logistics, or food, have a compliance review to prevent any issues that increase risk to the buyer (which they will use to drive the price down) upon transfer.

By taking these steps, you’ll be in a stronger position to negotiate a favorable exit and maximize the value of your business.