selling a business essential checklist

Congratulations! The due diligence is done, and you and the buyer are satisfied with the deal. You’re getting ready to schedule a closing date where you and the buyer, along with your advisors and other professionals, will dot the i’s and cross the t’s. So what should you expect before crossing the finish line?

Be Prepared for Some Emotion

By this stage, you’ve met and approved a buyer and settled all the essential terms. You may even have had a few deals fall apart along the way, making you anxious to see the sale through. But now, the transition comes into focus and becomes more real. The business you’ve nurtured for years will officially belong to someone else once all necessary documents are signed. You may alternate between joy and sadness, a sort of bittersweet feeling as you start a new chapter in your life.

Take Another Look

Before you complete the deal, you’ll need to review the final documents, such as a bill of sale, closing statements, non-compete agreements, leases, and other legal documents. There may be some last-minute negotiation regarding price, payment structure, and possible tax implications to reach the final deal, but once you and the buyer approve the documents, you can schedule a closing date.

You need to understand exactly what’s in a sale of business agreement so you’ll know what to expect, when to negotiate and how to potentially maximize after-tax proceeds and minimize future liabilities. Having trusted advisors, like your business broker, financial advisor, and attorney, by your side is essential to getting to the finish line.

After the Close

Even after the final close, you may not be done entirely. You’ll still need to file tax paperwork, and a qualified CPA or corporate accountant will be invaluable here. You may have also decided to stay on as a consultant to the business during a set period of transition. If so, be open and share how you communicate with employees, evaluate them, run the daily business – anything and everything that it takes to keep the business successful.

Then there’s the question of what to do with the proceeds. We can work together to decide how the payments will fit into your overall financial plan. We may want to earmark that money for life insurance, long-term care, investments, or retirement income. It all depends on your needs now and in the future.

The Essential Checklist for Selling Your Business

You’ll need to pass along some important information to the buyer to make the closing easier. Don’t forget about:

  • Alarm codes, computer access codes, and safe combinations
  • Asset allocation statement (IRS Form 8594) to file with tax return
  • Bill of sale or transfer documents for license, real estate, and vehicles
  • Keys to file cabinets, premises, and vehicles
  • Cashier’s check
  • Consent of entity owners to the sale of assets
  • Consulting contract (independent contractor agreement)
  • Covenant not to compete (non-compete agreement)
  • Customer lists
  • Employment contract
  • Escrow agreement for post-closing adjustments
  • Insurance certificates for the policy covering secured assets
  • Mortgage or deed of trust
  • Owners’ manuals for business equipment
  • Promissory note
  • Security agreement
  • Statement regarding the absence of creditors
  • Supplier lists
  • Title insurance commitment
  • UCC financing statement
  • List of all assets included in the sale, including fixtures, equipment, inventory, and accounts receivable
  • List of assets excluded from the sale (i.e., cash accounts, vehicles)

The Small Business Administration has a wealth of resources for business owners. Visit sba.gov to learn more about selling or transferring a business.

We Can Help 

The sale of a private business is usually a once-in-a-lifetime type of event, but the implications affect your lifestyle, your financial future, and even your family. Expert guidance can help you make important decisions based on objective analysis, not emotion. Contact Signature Wealth Strategies to work with your sales team to ensure your interests are well represented 

and that your bases are covered as you move on to the next stage of your life. 

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About Signature Wealth

Signature Wealth Strategies is a wealth management practice serving families like yours with a hands-on, concierge level service. Our advisors help you confidently plan your financial future through comprehensive strategies and custom solutions. We believe that each client’s story is as unique as his or her signature, and their financial strategy should be too.