Apr 18, 2023

Preparing to Sell Your Business

Written by Mark Underhill, CPA, CM&AA, CVGA

If you’re a business owner thinking about selling your business, congratulations! You’re about to embark on an exciting journey that could potentially bring a significant payout once the transaction is successfully completed. However, it’s important to remember that selling a business isn’t something that should be taken lightly and is rarely an easy process. It takes a lot of preparation, planning, and hard work to make sure that your business is ready for a transaction and that you get the best possible price for the business. In this article, we’ll take a closer look at some of the steps you should take to prepare your business for sale.

Prepare or Assemble the Team

Very few people ever get the experience of buying or selling a company. For those that have, it is typically a once-in-a-lifetime event that you only have one shot at. This makes it extremely critical that you surround yourself with a team of professionals who have the experience and expertise to appropriately guide you throughout the process. The most common mistake from owners looking to sell their businesses is that they fail to get the appropriate professionals involved at the appropriate time to help them. Having experienced accountants, attorneys, bankers, and wealth managers involved throughout the process can pay significant dividends by increasing the likelihood of a successful transaction and yielding a higher value. Ultimately, big events bring big opportunities and from a business perspective, few things are bigger than the sale of a company. Owners should consider items such as:

  • Estate Planning: Consider updating wills, establishing trusts, and examining opportunities to mitigate potential future estate taxes that could be generated by the sale of the business.
  • Tax Planning: You never want to let the tax tail wag the dog, but with time and notice, a good tax accountant can offer guidance in structure and terms that yield significant value and ultimately an increase in after-tax proceeds to a transaction.
  • Charitable Planning: For those who are charitably inclined and would like to donate significant cash after the transaction, consider gifting an interest in the company before the transaction. This can yield the tax benefit of recognizing the fair market value of the donation without recognizing taxable gain on the portion donated. Owners should also consider the use of a donor-advised fund and other gifting strategies to improve after-tax cash.

Know Your Numbers

It cannot be overstated how important it is that the business has a good handle on its financials. You need to be able to show potential buyers that your business is profitable and has growth potential. This means financial statements, tax returns, profit and loss statements, cash flow statements, balance sheets, and any other financial records are readily available, accurate, and timely. Issues with the accuracy and availability of the company’s financial information is the most common reason a business is unable to find a suitable buyer. Many sellers should consider obtaining a sell-side quality of earnings study and performing defensive due diligence. This allows sellers to identify potential items that may impact a transaction before they become issues, gain confidence in company earnings, and set the tone for potential contentious add-backs and adjustments to earnings that will ultimately bring value to the seller in a transaction.

Clean Up Your Business

Before you bring your business to market, you will want to make sure that everything is in order. This means taking care of any outstanding debts, clearing up any legal issues, and making sure that your business is in compliance with all applicable laws and regulations. You’ll also want to make sure that your physical space is clean and organized, and that your employees are well-trained and motivated. You want to put your best foot forward so a potential buyer is interested in you instead of the next company.

Get Your Paperwork in Order

When you sell your business, you’ll need to provide potential buyers with a lot of paperwork. This includes your financial statements, tax returns, contracts, leases, licenses, and any other important documents. You’ll want to make sure that all of this paperwork is organized and easy to find so that you can quickly provide it to potential buyers.

Hire an Investment Banker

Selling a business can be a complex and time-consuming process, and it’s not something that most business owners are equipped to handle on their own, especially as they still have a company to run throughout the process. This is where an investment banker can be extremely handy. An investment banker can help you with everything from valuing your business to marketing the company and finding potential buyers, negotiating with buyers, and closing the deal. Without an investment banker, the requirements of the owner increase significantly.

Identify Your Target Market

Before you start marketing your business, you need to know who your target market is. Who is most likely to buy your business? What kind of buyer are you looking for? Are you looking for a strategic competitor, a financial buyer such as a private equity firm, or an individual buyer such as a transition to the next generation of family or key members of management? Once you know your target market, you can tailor your marketing efforts to reach it.

Determine Your Requirements for a Transaction

Determining the price and terms for which an owner is willing to sell the business is one of the most important steps in the selling process. You’ll want to make sure that your expectations are realistic and reflect the true value of your business so that you can accurately communicate your requirements to sell the business. For many owners, the business is a culmination of a lifetime of work. Selling that business can be an emotional process as owners contemplate the impacts on themselves, their families, and their employees post-transaction. The goals of the seller may dictate that the sales price is not the ultimate driver of whether a transaction is successful or not. As time-consuming and costly as the process can be, establishing and communicating your requirements to close a transaction early can increase the efficiency and probability of getting to a transaction that satisfies most, if not all, of the seller’s goals.

Prepare for Due Diligence

Once a potential buyer has been found and an offer letter has been accepted, they will likely want to conduct due diligence on your business. This means they’ll want to examine your financials, contracts, leases, customer concentrations, and any other important aspects of the business. You’ll want to make sure that you’re prepared for this process by having all of your paperwork organized and ready to go. As discussed earlier, a sell-side quality of earnings and financial due diligence study can greatly expedite this process while also mitigating unnecessary risk on the transaction.


Preparing to sell your business takes a lot of work and preparation, but it can be a lucrative and rewarding process if done correctly. By following the steps outlined in this article, you can help ensure that your business is in the best possible position for sale and that you get the best possible price for it. If you would like more information or if you would like to discuss your unique situation with the BMSS Transaction Advisory Services team, please contact Mark Underhill, CPA, CM&AA at (205) 706-8917 or munderhill@bmss.com.

Written by Mark Underhill. Copyright © 2023 BMSS, LLC. All rights reserved. www.bmss.com