There are several steps to follow when preparing to sell your business. It is important to allow plenty of time for planning and organization, as the process will usually require many months to a year or more. Why does it take so long to prepare your business for sale? The simple reason is that many owners of LLCs, S Corporations, and even C Corporations do not keep up to date with business financial records and the documentation required to successfully sell or transfer a business.

Recently, a local company was approached by a major international tech company with a seven-figure offer. The original deal between the parties was reached fairly quickly. The challenges quickly arose during due diligence, and ultimately, the proposed acquisition fell apart. The large company became concerned about the acquisition target and the organization of its financial and accounting records. Ultimately, they found another company to acquire.

Business owners in this competitive global marketplace must be prepared to make significant business decisions on the fly. Many opportunities arise without warning. You may not have awakened this morning with the goal of selling your company, but an unexpected knock on the door or changing market conditions may present an opportunity that you need to be ready for.

You will need a team of legal, tax, accounting and business advisory professionals, and an experienced leader who can integrate the various elements of the equation to efficiently plan, organize and help make the process easier while providing sound counsel based on a higher and broader perspective of the various disciplines and how they interrelate.

Organizing and structuring financial and accounting information is the first step in preparing to sell your business or company. Usually, you will need at least the last three years of tax returns, bank statements, and business financials, which should include a "Profit and Loss" statement as well as a "Balance Sheet." Experienced and knowledgeable buyers will also want to know the "Adjusted Net Income" for the past three years.

Another step is to construct an overview of the business itself. This should include a comprehensive list of all assets, equipment, intellectual property, product inventory, existing suppliers, and customer information. The overview should also include all real estate and associated mortgages or leases and copies of contracts with present suppliers and sales and services agreements.

Are the corporate entity and all supporting documents in order? Have you fulfilled the legal requirements of corporate governance and compliance over the years? Are your corporate minutes and documents such as the operating agreement or shareholders' agreement updated and in harmony with other corporate documents such as your corporate bylaws? Your business entity should always be finely tuned, up-to-date and ready for acquisition or sale, ensuring a smooth transaction process should an opportunity arise.

If you intend to sell your business, you will need experienced professionals with the expertise to guide you through each step of the process. Obtaining an independent valuation or appraisal is often necessary to establish the basis for an offering price. The data provided by the valuation/appraisal expert(s) supports negotiations to achieve the maximum value for the business you've worked so hard to build. This information also assists potential buyers with their own financing efforts and speeds the transaction process.

Your legal team should prepare the necessary "Confidentiality Agreements" and "Non-Disclosure Agreements" to protect you and your company throughout the process. All of these preparations help to keep the "due diligence" portion of the transaction to a minimum number of days, as all of the essential financial, business, and corporate information is organized and ready for review.