Business Sale Information

In the sale of a business, collecting business information is one of the first and most important steps. The business advisor keeps this information as confidential as possible throughout the entire process. Better information usually yields better results; while "garbage in" often leads to "garbage out." This information enables other activities, such as the price analysis and advertising. Sellers who want to get the best price in the shortest time should arm their business advisors with the following:

Seller's disclosure statement: The seller discloses any business problems, on a form provided by the business advisor, to avoid surprises later when trying to reach a sale agreement or close escrow. Surprises can hinder or jeopardize the sale.

Contacts: The seller should provide contact information for the landlord, accountant, attorney, other key advisors, and any buyers who have seen the business. Sellers often have access to trade association websites that can provide useful marketing information for business advisors.

Financials: The seller should provide sales tax returns, income tax returns, income statements and balance sheets for the past 3 full years, as well as monthly or quarterly statements since then. The business advisor uses these numbers to calculate the SDE and validate the asking price of the business. Buyers always want to know how much money the business makes.

Lease: Much of the value of a business, especially a retail business, is often found in its location. And most small businesses rent space through a commercial lease. Buyers are very interested in knowing the rent, CAM and other charges, term, options and other terms of the lease. The purchase offer will usually be contingent upon assigning the existing lease to the buyer, or making a new lease between the buyer and the landlord.

Equipment and inventory: The seller should provide a list all equipment that is to be included and/or excluded from the sale, as well as the most current schedule of inventory, so the buyer knows what tangible assets he would be receiving for his money.

Other documents-such as licenses, franchise agreements, licenses, articles of incorporation, bylaws, brochures, contracts, patents, loans, benefits, environmental reports: These documents provide a more complete picture of the business for the business advisor, and will be inspected by the buyer during due diligence.