You’re selling your business. You have a signed letter of intent and terms are set. Congratulations. Go ahead and buy that champagne, but put it in the back of the fridge—way in the back.

A signed letter of intent (LOI) is no guarantee the deal is done. Next you have to make it through due diligence with your negotiated value (not to mention your sanity) intact.

Since the financial crisis, we’re seeing a new level of caution that’s driving due diligence processes through stringent detail. Many sellers are finding themselves mired in months of review.

If those fine-toothed combs uncover something unexpected, buyers request adjustments to the negotiated sale price. That puts sellers in an uncomfortable position: concede to a price reduction or go back to the beginning with a new buyer. Either decision is bound to create indigestion.

Fortunately, you can do a lot to make the due diligence process less painful. Make these preparations at least one (ideally three) years in advance:

Have a reputable firm review your financials and ensure that all records are in accordance with generally accepted accounting principals (GAAP). Best case scenario, you have this information in time to make adjustments. Worst case, you enter the sale process with somewhat lower, but accurate expectations.

Include a review of your inventory—what you have, how you account for it, and what is truly saleable. Take the next step and sell off any obsolete goods.

Perhaps the next biggest priority is making sure your customer contracts are assignable if at all possible. Plan far enough ahead and work that into your regular schedule of contract updates. You don’t want to be securing new contracts just prior to a sale (the worst possible time to have your customers reconsidering your relationship or negotiating new terms).

Meanwhile, get your arms around your customer information. Understand your customer concentration, sales and margins. Time kills all deals, so the faster you can provide this critical information the better off you’ll be.

You will also want to make sure corporate minutes are up-to-date, especially if you’re a C-Corp. Secure non-compete agreements with all key employees, and work to resolve any pending litigation.

Make sure equipment is in good working order and maintenance records are current. If you have any environmental concerns on your property, order an analysis. If problems are identified, get estimates for remediation.

Don’t be overwhelmed. A good intermediary can help you prepare for a sale and compile your records in advance of due diligence.

Selling your business is an exciting time. Just don’t get out that champagne before due diligence is done—it will get warm and flat before you have a chance to drink it.

Scott Bushkie is President of Cornerstone Business Services, a low-to-middle-market M&A firm. Reach him at 888-829-9061 or [email protected]

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A thought-leader in the industry, Scott developed the Cornerstone Process to offer investment banking M&A-level services to the lower middle market. The result is a closing ratio that’s more than double the national average.