Small Business Owner: I Have A Buyer For My Business – Now What?
by Martin Hansen
First, Congratulations! Now, Let’s Get to Work.
So first, make sure your business is ready to sell, which includes two primary tasks:
- Collect the necessary business data and get it stored electronically for easy transfer to a potential buyer once you have qualified them and have executed the necessary non-disclosure agreement.
- Prepare your location(s) for possible tours or inspections; as they say in the military, get your location(s) “ship-shape.”
Now that these critical tasks are complete, you are ready to begin negotiating terms and deal structure. For more information on this step, see my article Small Business Owner: Negotiate Terms With A Buyer.
- Collect the buyer’s contact information, along with that of any professionals the buyer may be using to facilitate the transaction. This may include a business broker or M&A Specialist, an accountant or CPA, or an attorney. It’s critical to have this information as you begin to negotiate the terms and structure of a potential deal, as the professionals may need to be involved for tax, price allocation, and legal structure issues or questions.
- Request that the buyer provide proof of their qualifications to buy, and that they outline the type of deal structure are they looking for. Be blunt, yet clear, with the potential buyer, and do not be afraid to ask the hard questions…now. You do not want to get down the road with a potential buyer, only to find out that they are not qualified or that they want you to finance the entire deal with little or no cash at close.
- Negotiate deal terms and structure that you both can agree to (and which the professionals are OK with), then draft and execute a one-page term sheet that outlines the agreed-upon terms.
Once you have a qualified buyer with professional advisors and a signed term sheet, you are ready to have counsel create the legal documentation necessary to get the deal closed and transitioned to the new owner (buyer).
For additional assistance, the process is made simple in DealMaker360 – good luck!