Go Legal Yourself!, 2nd Edition

CHAPTER 11How Do I Prepare for Exit?

Every small business owner pours more than long hours into their company to make it a success. We all know that there are plenty of tears, sacrifices, and struggles to make a small business stand on its own two feet, which makes the decision to sell all the more complicated. When my clients get to this stage and are ready for sale, the number two question most frequently asked in the Exit phase is how to prepare for exit.

How Do I Prepare for Exit?

To answer this question, you need to consider the reason for the sale so you can explain it to buyers. This is one of the first questions a potential buyer will ask: “Why are you selling?” In my experience, business owners commonly sell their company for any of the following reasons:

• Retirement
• Partnership disputes
• Illness and death
• Being overworked
• Boredom
• Not making money

Selling a small business can be a complicated process, both emotionally and logistically, and requires careful planning. You'll have to get your company in tip-top shape before entertaining serious offers, and make sure your financials are rock solid at all times. Here is a checklist I have created for my clients who want to get their business ready for sale, which I call the 6 Bs of preparation:

1. Business Financials: Financial statements are written records of your business's financial situation. They include standard reports, such as balance sheets, profit and loss statements, and cash flow statements. Selling a business ...