Selling Your Business

Selling a business can be very complex and overwhelming; and for most business owners it is a once in a lifetime process. This article will summarize certain key steps involved.

The sale process can sometimes be quite lengthy. During that time you need to continue to do what you do best – running your business to maximize profits, which will help insure the best price. Thus, it is important that you have a team of experienced transactional professionals focusing on the details of the sale transaction while you are focusing on your business.

Your team of advisors should include: 1) an attorney experienced in transactional work, who can not only draft the documents, but also negotiate the terms of the deal and assist in your complying with the buyer’s due diligence inquiry; 2) an investment banker, who can determine a proper selling price, market the deal and procure a buyer that fits the transaction and your goals; and 3) an accountant, who can help structure the transaction to obtain tax and financial results that are optimal for your specific situation

Look At Your Business As The Buyer Will.

Prior to searching for the optimal buyer, we recommend that an internal diligence review be conducted similar to that which a potential buyer will undertake. In conducting the review, you should gather all of the company’s financial and tax information, ownership and formation documents, employment agreements, patents, deeds, leases and material contracts. It is important to make sure that all records are accurate and current, and that all necessary formal action has been taken. Any buyer will require you to produce these documents for his/her review, so this preliminary internal review puts you one step ahead of the potential buyer and progresses the transaction process more quickly. Your advisors can help you decide what information is necessary and have it ready and accessible for the potential buyer.

It is important to remember that prior to giving the buyer access to any information, you will need to protect yourself and your business from disclosure of the information to a competitor or keep it from otherwise being used to your disadvantage. This is accomplished by having your legal counsel prepare a “confidentiality” or “non-disclosure” agreement for the prospective buyer to sign. Such agreements generally restrict the use of information, provide for return of the information if no sale occurs and prohibit the solicitation of your employees.

Marketing and Negotiation

Conducting your internal review will not only have you ready to provide information to prospective buyers, but it will enable your investment banker to help you determine the proper price, develop promotional materials and target the potential buyers that are the best fit for your company.


We advise our clients that they should assume that every conversation with a potential buyer, regardless of how casual or brief, is part of the negotiating process. Every word and the context in which it is said can affect the terms of the deal, including the ultimate price. A seller should be even more cautious if the buyer and his advisors have been involved in purchasing other businesses.

All of your advisors will be invaluable in the negotiation process, working together to not only get the best price but also to determine the best way to structure the transaction so that you achieve optimal tax and economic results. A dollar received today is worth more than the same dollar received at a future date, and a dollar, whenever received, is even more valuable if it is tax free or tax deferred.

Documenting the Transaction

Once a buyer has been found and the deal has been negotiated, your legal counsel will draft and/or review the documents necessary to effectuate the sale of the business. While such documents vary, they generally include a purchase agreement, real estate leases or deeds, and employment agreements. The buyer will also have his/her advisors review, comment on and modify the documents. So you can expect multiple drafts and it is important that each draft be reviewed very carefully to check for any changes.


Some of the crucial provisions in the purchase agreement will be the amount, form and time for payment of the purchase price; post-closing adjustments for inventory, receivables or working capital; the amount of funds held in escrow to cover contingencies; representations and warranties; disclosure schedules; indemnification obligations; and closing requirements. Your legal counsel will help you understand the provisions, which understanding is crucial to ensuring that your representations about the business are accurate. Legal counsel will also assist in achieving specific goals that you, as the seller, will want to meet, including limiting disruptions in your business operations prior to closing and minimizing your post closing liabilities.


Although selling your business can seem stressful and daunting, the best results will be obtained if you are patient, have realistic expectations and rely on the advice and guidance of a team of professionals experienced in sale transactions. Then, when it is all over, you will be able reap the rewards of the many years of hard work that you put into your business.