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Selling Your Business to Retire?

Written by Gary L. Weston on May. 10th, 2022
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Preparing to Sell

Each owner who seeks to sell his or her closely held business needs to be well prepared before attempting to do so. Smart preparation entails advance planning and the assemblage of critical information about the business, its personnel, and its markets. Careful preparations help a business defend its stated value in the marketplace and mitigate against the application of discounts by prospective purchasers.

Typically, the owner’s attachment to a small business is very emotional. A key element of smart preparation is the adoption, by the owner, towards taking a positive attitude when bringing their business to the marketplace. Related to the positive attitude is the commitment to take the time needed to produce the requested information, meet with prospective purchasers, and meet with special advisors as needed (e.g., Attorney, Business Broker, CPA, etc.) to outline the parameters of the sale. In addition to the above, thorough preparation involves providing the following information: 

Business Story, Product Descriptions, and Competition – Any written descriptions of the business (brochures, product descriptions, recent advertisements, new articles, etc.) its history, and market position in the industry; a written summary of any exclusive long-term contracts for sales, if any; and any information on its major competitors (current and future) and potential changes in the overall industry. Insurance information, lease, and franchise agreements are also helpful.

Current Financials – CPA prepared tax returns for the past 3 to 5 years, plus interim profit and loss statements (year to date for the most recent quarter), a current balance sheet, and a written summary of current debt affecting the business. The owner should understand keeping the financial information up to date during the marketing process. 

Building, Land, and Leases – Summary of the facilities occupied by the company, use and status, ownership, payment schedules, copies of most recent real property tax statements, recent appraisals (if any), zoning status, statements of any problem areas, and copies of current leases.

Equipment, Fixtures, and Machinery –Current list of equipment, fixtures, and machinery, most current depreciation schedule, most current personal property tax statements, copies of recent appraisals (if any), a summary of equipment that is leased and its use, copies of its long-term equipment leases, and owner’s statement of his or her best estimate of the value of replacement costs.

Inventory: Summary and descriptions of inventory, number of turns, and the owner’s statement of his or her best estimate of the value of inventory, at cost.

Taken together, the above-listed information will provide a professional Business Broker with a sound initial basis for computing the Opinion of Value for the business and for forming a comprehensive executive summary to be used in the marketing and successful sale of the business. 

If you are interested in selling your business, please contact Gary L. Weston with Coldwell Banker Commercial Business Sales Division. Email – gweston@cbcre.com Phone- 503-566-5711 or 503-580-4419. Licensed in the State of Oregon

Gary L. Weston

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