When one’s health fails or becomes unaffordable, they may be forced to sell their firm. This article discusses several matters you should consider before listing your firm for sale if you are fortunate enough to be in a position to plan for the sale of your business.
Tax advise from a licensed accountant should always be sought before signing any contract, including a letter of intent. That person might have recommendations for structuring the deal different from the buyer’s. While at it, ensure all your source deductions, remittances, and tax filings are current.
If your company is required to register with the WSIB, ensure the registration is in good standing and that all of the information you provide about your employees to the WSIB is accurate (such as the date of initial hire).
If your company is organized as a corporation, you should ensure the Minute Book is always up to date. If the Minute Book is out-of-date, it has to be updated (and maintained correctly). This is crucial in the event of a share sale since flaws in the Minute Book could significantly affect the asking price a buyer is ready to pay.
Think about your future intentions for your engagement, if any, in the company. Sometimes a buyer will want to keep the previous owner around for a while to help with the changeover. Before the conversation, it is helpful to have a general notion of where your boundaries may lie.
Once you begin selling your company, you may contact various potential buyers. But, of course, they wouldn’t be ready to sign a contract to buy the company before fully comprehending its crucial aspects, like profitability, operations, etc. Therefore, it is suggested that a potential buyer sign a Confidentiality and Non-Disclosure Agreement before receiving any information so that, if they decide not to make the acquisition, they won’t use the information they provided against your company.
Examine Significant Contracts
Examine your premises lease, equipment leases, supplier agreements, financing/loan agreements, and if you have business partners, partnerships or shareholder deals to ascertain how a potential business sale would affect the various legal relationships that exist and permit your business to operate. For example, some of these contracts may stipulate that the other party must approve the deal, and others may stipulate that you must continue to be liable for the duration of the contract even if it is transferred to a buyer.
Are you adequately current with your inventory counting system if inventory is going to be moved as part of the sale? Can you inform a customer about what is available and how much each item costs? This can be very tough and time-consuming if your records haven’t been kept up with. If you want to get the most out of your business, start arranging your inventory records as soon as possible.