In the coming post, Transworld will be addressing the first step of the Transworld buying and selling process as part of a twelve part series breaking down our entire process piece by piece. In this series, each post will take on one step of the process and detail it clearly so our readers can best understand our service offerings. During this series, we invite you to refer back to some of our previous blog posts to read more in depth on many related topics as we make our way through the buying and selling process.
The first step in our twelve-part series is Preparation. We will be looking at this process from the seller's point of view and will outline the key main differences for the buyer.
The preparation of a business for sale encompasses three main items:
- Financial Documents and Records,
- Management, and
- The Transition Plan.
Having these three items in good shape for buyers will provide the necessary assurance that your business is a good business and would make financial sense to purchase. These three items will also facilitate the sale of your business and increase its likelihood of an ultimate and optimal sale.
Financial documents and records must be robust and complete, as they are needed for Due Diligence, a step in the process later on. The most important documents will be the last three past years of Profit & Loss statements, Balance Sheets, and Tax Returns.
Management needs to be in order, so the buyer can easily step into the business and it will continue to function. This preparation includes outlining job descriptions and responsibilities for all company employees and management. If you are the management in place, then training an employee on your responsibilities or developing standards, processes and procedures will be necessary. The more a seller can remove themselves from operations, the more saleable that business becomes.
Developing a detailed transition plan will ensure that employees, vendors, customers etc. will all be properly progressed from the current owner to the buyer. The transition plan should encompass full business operations.
When these elements are taken care of it will be time to list the business for sale. If there are major areas of neglect regarding these three items than a Prep to Sell program will be more appropriate than pursuing a sale at the current time.
Buyer's Key Differences: The buyer's Preparation process is vastly different than the seller's. At this stage in buying a business, the buyer should be reviewing their finances and identifying how much business they can afford, pinpointing the characteristics they prefer in a business and using search tools such as the Transworld website and listing sites to find available businesses. But most importantly buyer's should contact their local business broker, who can facilitate the search for a business and the buying process itself.
If you are serious about buying or selling a business feel free to schedule a consultation with one of our brokers today!
Rachael Holstein joined the Transworld Team in 2016 as Marketing Coordinator. Her working experience has been largely focused on Business Development and Marketing in the finance, architecture, property management, and information technology industries. A long time resident of Cleveland, Ohio, she attained her Undergrad from John Carroll University and a Master's Degree in Global Interactions from Cleveland State University. She relocated to Denver in 2013 for a change of scenery and a bit of adventure.