Whether you’re retiring or hoping to pursue new opportunities, there may come a time when you’d like to sell your small business. While this is often a complex process, there are ways to simplify the transaction considerably. While hiring a corporate law attorney will ensure you have strategic guidance at every stage of the proceedings, use the tips below to prepare. 

What to Do Before Selling a Small Business

1. Organize Your Financials 

Ideally, you’ve been maintaining impeccable financial records since day one. If this isn’t the case, it’s essential to organize your documents. A corporate law attorney will explain a potential buyer’s precise expectations regarding your financials and help devise strategies for meeting them. Examples include accounting for all income, gathering past tax returns, and separating all personal expenses from the company’s operating costs. 

2. Draft a Basic Purchase Agreement

You should draft much of the purchase agreement long before finding an actual buyer, since this will help you determine how to structure the sale. You’ll want to know, for example, which physical assets and intellectual property will be included in the deal. Although some components of the purchase agreement are negotiable, drafting an outline in advance will facilitate the transaction when the time comes. It will also give you time to transfer assets that won’t be included in the sale into your name. 

3. Determine a Fair Asking Price

You’ll enhance your bargaining power at the negotiation stage if you know the precise worth of your business. Value will typically be based on your assets minus liabilities, your revenue or price-to-earnings ratio, and your future cash-flow assessment. Other factors that are harder to evaluate include strategic value, physical location, and other industry-specific metrics. While you can find various tools online for calculating value, a formal report from a professional business valuator may be best to ensure you have thorough and accurate picture. 

If you need a corporate law attorney, turn to MacVean, Lewis, Sherwin & McDermott, P.C. For more than 130 years, this practice has been providing legal counsel for clients throughout Middletown, NY, and the entire Hudson Valley. They offer services that are especially helpful for business owners, including employment law and commercial litigation. To explore all the services they provide, visit their website. To schedule a free consultation with a corporate law attorney on their team, call (845) 343-3000.