Business brokers Orange County understand that to convince a buyer to consider the purchase of your business, you must provide proof. This proof is seen in the paperwork. When getting ready to sell a business, it is vital that you make ready all the documents that pertain to your business. In this article, we will be taking a look at the primary documents that you will need.
The first thing that any serious buyer will do is conduct a thorough investigation of your company. This is known as due diligence. It is done within a period that has been specified in the letter of intent. It is only with due diligence that the buyer is able to determine the value of the business as well as the risks that come with buying it. The buyers will consider the following things:
- Business operations
- Legal and tax compliance
- Financial performance
- Customer contracts
- Intellectual property
At times, a buyer will want to observe the operations of your business, examine the procedures and processes, analyze the finances of your business and evaluate the risks that are associated with your business. Because of the sensitive nature of this involvement, your business broker Orange County will draw-up a foolproof non-disclosure agreement that buyers have to sign before due diligence.
When getting ready for the buyers’ due diligence, it is imperative that you prepare the relevant documents. Below are the main documents that buyers will want to see.
Nobody wants to spend money on a dying business unless the price is right and they have a way of saving it. The first documents a buyer will ask for is the financial records. These will tell him if your business is doing fine or not. Your business brokers Orange County will help you know which documents will be needed. The main documents include the following:
- Current balance sheet
- Profit and loss statements for the last 24 to 36 months
- Bank loans and letters or lines of credit
- Cash deposit records
- Outgoing costs breakdown
- Details of the company’s automated financial systems
A buyer will also want to know how your business operates. Here are the documents you will need to gather:
- Stock inventory list
- Supplier accounts
- Utility accounts
- Business history
- Asset list
- Audit work paper files if available
- Insurance details
Has your business been operating legally? The buyer will ask for these documents:
- Work health and safety guidelines
- Client contracts and trading agreements
- Franchise agreement
- Employee contracts and agreements
The above are the essential documents you will need. Your business broker Orange County will help you get them ready. However, before you disclose these documents to buyers, you must do due diligence. Ensure the buyer can secure the finances that are needed to buy your business and assess the experience they have running a business. Don’t ignore the buyer’s future plans for your business.