After years, maybe decades, of owning and managing your business, you have decided it is time to sell. Without question, the very first thing you should do is locate and carefully review all of your leases (operating, real estate, equipment, etc.), licenses, customer purchase orders, vendor codes, blanket orders, supplier contracts, floor plan arrangements, consignment relationships, and the like.
I have experienced first-hand the angst of getting within days of closing on a business transaction only to learn that the seller – despite assuring all stakeholders that there would be no problem getting all appropriate and required (by both buyer and bank) assignments – encountered unexpected red tape or unanticipated difficulties.
Leases, licenses, purchase orders, vendor codes, contracts, floor plans, etc. are valuable goodwill assets of your business for which the buyer is paying and obviously expects to transfer unencumbered at closing. This is why it is crucial that you assess what arrangements are included in the goodwill component of the price of your business. For each item, you should possess written documents to be closely examined for restrictions that preclude transfers to the buyer; if restrictions exist, the necessary steps to pass your goodwill components smoothly and legally to the buyer must be determined.
If you have relationships with governments (federal, foreign, state and/or municipal), institutions (military, health networks, banks, leasing companies), landlords, major customers, large vendors, etc., it is possible you could learn that the transfer of these important assets are far more difficult than common sense would indicate.
So, Job #1: gather up the documents associated with your company’s valuable relationships and make sure you are positioned properly to transfer said relationships easily and timely to the buyer of your business. I promise you that this will make the always difficult nature of selling a business a lot less trying.
Contributed by Michael Greengard, Praxis Business Brokers.
Through the Michigan Chamber’s partnership with Praxis, we can guide you through a step-by-step process of the complexities, all while maintaining complete confidentiality. To learn more about selling your business, please contact Lindsay Fulton at firstname.lastname@example.org or 517-371-7691.