For some entrepreneurs, a successful exit is the plan from the start. They build a business worth millions, sell it and move on to the next venture.

For others, especially small and mid-sized business owners, an exit may not be at top of mind when they’re focused on growth. But certain signs – an impending retirement, increased risk or, even, major success with their product or service  – can signal that it’s time to map out a business exit strategy.

A smooth business exit can’t happen without preparation, careful planning and the support of a knowledgeable team.

Here are four critical steps as you get your business ready for a sale.

1. Pull your business sale team together

A business exit, even for a small or mid-sized company, can be incredibly complex. You’ll need to consider everything from the state of your current company, all of its accounts and client lists, legal contracts, tax implications, and human resources issues.

Depending on the size of your company, your team of advisors should include legal counsel, accountants, perhaps a business broker, and a business valuation expert.

2. Be ready for due diligence before the sale

Due diligence can be among the most time-consuming parts of a business sale, but it’s critical to its success. Start pulling together your paperwork now, even before a buyer comes forward.

For due diligence for a sale, you’ll need a broad range of documents that include, but are not limited to:

  • Organizational paperwork, such as articles of incorporation, bylaws and meeting minutes.
  • Financial information, such as audited statements, a credit report and schedules of inventory, accounts payable and accounts receivable.
  • A list of physical assets and any real estate holdings, including U.C.C. filings, deeds, title policies and zoning approvals.
  • Details about any pending or potential litigation.
  • Information about customers and the company’s purchasing and credit policies.
  • Any material contracts, including loan agreements, letters of intent and contracts with any officers or directors.
  • All tax returns from the past three years, along with tax liens and employment tax filings.
  • Intellectual property information, including trademarks, copyrights and patent applications.

Exactly what paperwork is required will vary widely depending on the business. Your legal team should have the expertise to help you create a list of essential documents and required information.

3. Make sure the company is in legal compliance

Does your business hold all of the required business licenses and permits? Do you abide by other mandates, such as internet and privacy laws, for example the European Union’s General Data Protection Regulation (GDPR), financial regulations such as SEC requirements, anti-corruption laws and HR-related rules? Are your contracts clear with clients, consultants, employees, partners, and vendors? Are there pending issues that could turn off a potential buyer?

Noncompliance could open a company up to fines, penalties and legal action – and of course make an acquisition much less attractive to a buyer.

4. Look for outstanding issues

Review the paperwork above (your attorney will do most of this) and try to poke as many hole as possible. Have you had issues with clients, vendors, the IRS? Resolve these before they come up with a potential buyer because they could kill the deal. As you consider your exit strategy, now is the time to make sure everything is in order. Prepping for a business exit requires diligent preparation. But, working together with your legal team, it’s possible to craft a smooth exit – and even speed up the process.

We are not your average law firm. Think of us as the next step in your company’s growth.  When you work with Gouchev Law, you can expect innovative solutions, adept business guidance, and aggressive advocacy to help you achieve your goals and protect you from risks. At Gouchev Law, we help companies of all sizes. Schedule a free strategy session today to see what Gouchev Law can do for your business.


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