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 preparation helps a business defend its stated value in the marketplace, and militates against the application of discounts by prospective purchasers. 

A key element of smart preparation is the adoption by each owner of a positive attitude towards taking their business to the marketplace, and a related commitment to taking the time needed to quickly produce requested information, meet with prospective purchasers, meet with special advisors as needed (e.g., attorney, business broker, CPA, etc), and negotiate the deal.

In addition to the above, thorough preparation involves having at one’s fingertips the following information:

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

Current Financials – CPA prepared Tax Returns for the past 3 to 5 years, plus interim Profit & Loss statements (year to date for the most recent quarter), a current Balance Sheet, and a written summary of current debt affecting the business. Each owner must commit to keeping the financial information up to date during the marketing process.

Personnel, Compensation & Benefits – Current list of key personnel, job titles, pay schedules & benefit packages.

Buildings, Land & 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, statement of any problem areas, and copies of current leases.

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

Inventory – Summary and description 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 sound initial basis for forming an Opinion of Value for the business, and for completing a comprehensive Executive Summary to be used in marketing the business for sale.