We help business owners buy and sell companies. It can be fun; it can be stressful. It always makes for a busy year end. Often, we first get asked about the deal once the buyer and seller have already found each other. Sometimes many of the terms are set. Great! Other times, a business owner comes to us and says, “I want to sell my business.” But they don’t know many details, like, to whom, for how much, or really, what is being sold. They do know they want it sold now though because they are tired. That is a recipe for a low price. And a low price is the difference between celebrating with a paper umbrella in your mai tai at home, rather than walking on a tropical beach.

So in order to get the walk on the beach, what should happen? Planning should happen. First, get your business house in order. Know your numbers. Yes, we keep saying it. Yes, I know I’m a lawyer not an accountant. No, I don’t like doing financials either. But we gotta do it. Know where your money is coming from and where it is going. If you don’t know, then any prospective buyer isn’t going to know. And what they don’t know, they don’t pay for. In fact, they often discount it. Know whether or not you follow Generally Accepted Accounting Principles (GAAP). If you don’t know what that means, when buyers ask you to guarantee that you do follow it, you’re going to have to learn. And then you may learn that you are not following those standards, and that may be a problem. Maybe it isn’t an issue, but wouldn’t you rather find out now? Yes. Yes, you would.

Know who is likely to buy and what they are looking for. Then make sure your business has it, and that it’s easy to see that you have it. Are you a consumer product good where branding is important? If so, are your trademarks protected? Are you a Software as a Service where subscriptions are king? Do you know what your subscription renewal rates are? Are your contracts assignable? Are the most important things in your business something that can be sold by you? If your entire business hinges on something, make sure you know what that thing is and find out how you can make sure that thing can be sold.

Finally, know who and what is selling. Will this be an ownership sale? All of the owners or just some? Will it be the assets? All of the assets or just some? Who has to approve that? Are they on board? Are they alive? Are they reachable? When I ask are you an LLC or a corporation, have an answer. When I ask are you a member managed or a manager managed LLC, have an answer. Preferably, an answer that isn’t “I don’t know.”

As you can see, all of these things could (and should) start long before the sale is on the horizon. Buyers like to see what they are buying, and a void of information is not helpful. Start building that treasure trove of information before the beach is beckoning, so you can have the paper umbrella in the mai tai on that beach walk rather than at your neighborhood bar!