CarpenterHawke Web 6-10-19 - Page 1

Preparing the Business for Sale
For sellers to receive top dollar for their businesses, planning is critical! It is not
something to put off just prior to the decision to sell. Following are some factors
to consider, both long-term and short-term.
Long-Term Considerations
Ideally, the seller will start planning a full year in advance of a sale, because
numerous elements will take considerable time and expense to execute.
Most small private companies, for example, have their financial documents
“reviewed” or “compiled” but rarely audited. Auditing statements involves
conducting an actual physical inventory, with each accounts receivable and
all other financial details verified in the process. While audited statements are
mandatory for public companies, many private companies opt not to pay the
extra cost of auditing, which can range from $10,000 to $40,000. However,
an audited statement, which is a verification of the reported numbers in the
financials, may result in a higher offer by the buyer.
Other items to address in preparation for selling a company include cleaning
up the balance sheet of old debts and writing off uncollectable accounts
receivable and old inventory. This ensures that the buyer is not deterred by a
less than pristine financial statement.

Preparing the Business for Sale

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Settle outstanding lawsuits and engage top management in non-competitive
and stay agreements.
Further, make sure the plant is in excellent physical shape; spruce it up if need
be. If the facility does not show well, it will very quickly turn off buyers.
Short-Term Considerations
In addition to the long-term issues discussed above, certain elements need
to be considered in the short term. Prior to going to market with the sale of a
company, sellers need to allocate about two to four months for organization
purposes. A critical element in organizing a business sale is to assemble a
team of advisors, including a mergers and acquisition (M&A) intermediary. This
representative will partner with the seller during the entire selling process and

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